Debt ‘limits’ State’s capacity
6 February, 2023, 11:00 am
Fiji’s $10 billion national debt and a further $1.8b in contingent liabilities will severely limit the Coalition Government’s capacity to borrow further for critical capital expenditure on infrastructure such as roads, ports, hospitals, water and sewerage.
“Our national debt also restricts the Government’s ability to direct spending into key areas such as education, health and social welfare payments,” said President Ratu Wiliame Katonivere as he opened the 2023-2024 Parliament session on Friday.
“As a small island nation with a narrow resource-based economy, prone to natural disasters and geographically isolated, it is important that we must continue to take a cautious approach as we face headwinds. We have been reminded of these challenges on many occasions.”
Ratu Wiliame, said the Government had responded to urgent demands while assessing the state of Fiji’s finances, and re-prioritising and re-deploying funds for urgent and critical needs.
“It will be necessary over the next few months to embark on a comprehensive financial review.
“The focus will be on consolidating government finance to improve revenues, and reducing waste, and mismanagement in expenditure so that the limited resources can be directed to priority areas.”
He said government must “get its economic house in order” to iron out pressing issues like the pressures on the economy. He also said the Government must recognise that the private sector was a critical driver of economic growth.
“They need freedom and flexibility to pursue their aims, but they must operate within the law and respect the environment. Government must put into place necessary measures so that there is a level playing field, certainty and consistency of policies that will boost confidence across the board.
“The Government will work in partnership with all stakeholders (vis-a-vis the private sector, trade unions, civil society organisations and traditional institutions) in working together to grow and diversify our economy. To do this, the Government must get its own economic house in order.”
Ratu Wiliame highlighted the national debt was anticipated to reach the $10 billion mark by this July – which would account for 85 per cent of Fiji’s GDP.
“There is another $1.8b in contingent liabilities. These are mainly in the form of loan guarantees, some of which are expected to be called up. This amounts to around 15 per cent of GDP.”