In a recent pre-Budget video message, Biman Prasad, the Minister of Finance and Deputy Prime Minister, discussed the importance of generating income to service national debt. The 2024-2025 National Budget, due to be released today, is expected to focus on managing the nation’s debt levels. The government faces the challenge of covering expenses and funding budget deficits while dealing with significant pre-existing debt.
Prasad highlighted the need for economic growth to reduce the debt-to-GDP ratio. Government’s 2022-2023 Annual Debt Report revealed that the total national debt was $9.7 billion at the end of July 2023, equivalent to 80% of the Gross Domestic Product (GDP). Last year, the government’s measures resulted in reducing the debt-to-GDP ratio to just below 80%, with the current debt repayment around $85-$90 million per month.
Prasad further stressed that without economic growth, the government would be forced to raise taxes, with potential cuts on services, education, and health. He underscored the need to reduce government wastage and to encourage economic growth of an average of 4.5-5% over the next 10 years to bring the debt-to-GDP ratio down to 50-60%. For small nations like Fiji, this ratio is deemed as most comfortable.