GOVERNMENT will borrow a total of $1.48billion during its 2025-2026 financial year (FY2025-26) to finance its budget deficit. Out of that, about $960million will be borrowed from the domestic market.
This was confirmed by Deputy Prime Minister and Minister for Finance Prof Biman Prasad in response to questions from this newspaper following Friday’s national budget announcement.
He said 65per cent of Government’s proposed borrowing for FY2025-26 will be sourced locally while the rest will be borrowed offshore.
This translates to an estimated total loan of $960m from domestic sources and $520million from overseas for FY2025-26.
Although expansionary, with Government spending more on education, health, security, social welfare, infrastructure as well as forgoing revenue through a 2.5per cent reduction in Value Added Tax to help ease cost of living, the 2025-26 national budget was crafted without any significant increase in tax measures.
Government will instead borrow to finance its 6per cent to GDP net deficit ($886.04m) and pay its debt commitments for the year ($601.96m).
The Fiji National Provident Fund, as the domestic market’s major financial institution, is the top buyer of Government bonds, with Government papers comprising over 40 per cent of its investment portfolio and contributing 27per cent of its annual investment income.
Government also has a line-up of international financiers that are willing to lend on very concessional terms, Prof Prasad said.
“We’re getting some very, very concessional loans. Some with 0.1 (per cent interest rate), some with 10 year grace period before the loan repayment commences, so we have some really good financiers and there a number of multilateral players now in the system. Players like the Asian Development Bank (ADB), the World Bank.”
The ADB is Government’s top multilateral lender, mostly on infrastructure.
Prof Prasad said Fiji’s decision to undertake some major economic policy reforms in two and a half years has “not only supported our strategy to grow, it also sends a very clear signal to the international community, our development partners that we mean business.
That we have a plan, we have a path, we have a very clear vision of what we want to do in the next five years, 10 years, 20 years.”
Borrowings for FY2025-26 will take total Government debt to a projected $11.70billion or 79.8per cent of GDP by the end of July 2026, according to Government’s budget documents.
Note: This article was first published on the print version of the Fiji Times dated June 30, 2025
