Fiji’s new “People’s Budget” promises relief to households by lowering taxes and raising spending, but critics question the long-term costs and motives.
Fiji’s 2025/2026 National Budget unveiled recently with much fanfare, hailing it as a “budget for the people.”
Deputy Prime Minister and Finance Minister Biman Prasad announced an expansionary $4.8billion plan packed with tax cuts, subsidies giveaways aimed at easing citizens’ hardships.
Supporters have praised the budget’s generous outlays on education, health, and social welfare, dubbing it a “people’s budget” just as the minister said at its first reading, outlining the goodies for its social measures.
However, a closer look reveals that this largesse comes at the price of a sharply higher deficit and mounting public debt.
The 2025/26 budget entails a net fiscal deficit of $886million at more than 6.0 per cent of GDP and possibly much higher in the event economy fails to grow as predicted.
Entailing this net deficit, a gross deficit (including debt repayments) of roughly $1.49 billion hangs over the head of this tiny nation – 10 per cent of the GDP in current prices and nearly 31 per cent of total government expenditure.
Critics, many of those who are reluctantly muttering that such a big-spending budget in the run-up to the 2026 general elections is less about prudent economics and more about politics – essentially an election budget dressed up in people-friendly rhetoric. In this article, we take a critical look at Fiji’s 2025-26 budget, focusing on the widening deficit, the national debt trajectory over the past decade, and the slew of giveaways that lack accompanying reforms or strong oversight mechanisms.
Deficit blowout in an expansionary budget
After two years of relative fiscal restraint, Fiji’s government has dramatically pivoted to an expansionary stance. The 2025/26 budget boosts spending across almost every sector, reversing the consolidation gains of recent budgets. Total expenditure is projected at $4.83 billion (33.0 per cent of GDP) against revenues of $3.95 billion, resulting in a net deficit of $886 million (6.0 per cent of GDP). This marks a steep increase from the previous fiscal year’s deficit, which remained under 4 per cent of GDP as per the Budget Supplement. With this intended gross expenditure, the financing requirement balloons to about $1.488 billion (around 10 per cent of GDP), a level of overall deficit financing Fiji has not seen since the COVID-19 pandemic.
Mr Prasad defended the higher deficit as a “counter-cyclical” measure to safeguard the economy amid global uncertainties, arguing that boosting domestic demand now will help sustain growth.
The spending spree has resulted in a capital-to-operating expenditure ratio of approximately 19:81. This is notably below the government’s medium-term fiscal strategy target of a 30:70, which was aimed to ensure adequate funding for infrastructure development and productive sector incentives.
Indeed, the budget includes significant tax cuts, primarily the VAT reduction from 15 to 12.5 per cent intended to encourage consumer spending despite the hit to revenue of more than $300m. However, opposition figures are sounding the alarm that
“The current trajectory is deeply troubling, and the government must change its fiscal strategy to one that is truly sustainable.”
Another MP quipped that “the way the budget is being presented, it’s like the government is trying to show that in one year Fiji will become a developed country”.
This underscores concerns that the spending spree is unrealistically ambitious and to some extent reckless. Independent economists note that the fiscal deficit widening to 6 per cent of GDP effectively undermines the hard-won fiscal management, in particular after COVID-19 pandemic.
This is likely to put Fiji back on a path of heavy borrowing, which the Minister of Finance used to lament when in the opposition. The budget explicitly confirms that the deficit will be financed by a mix of domestic and concessional external loans.
Soaring debt: A decade-long perspective
Fiji’s public debt had climbed to worrying heights due to borrowings during the COVID-19 years. This raised questions about the long-term cost of the budget’s giveaways. Now the same questions arise again. A decade ago, Fiji’s debt-to-GDP ratio was considered moderate: between 2013 and 2019 it remained below 50 per cent, even dipping to around 43 per cent in 2015 at its lowest.
At the end of the 2018/2019 financial year, total government debt stood at approximately $5.7b, equivalent to 48.4 per cent of GDP.
This changed dramatically with a series of shocks and deficits in the ensuing years – Cyclone Winston in 2016 combined with some other disasters such as flooding ticked up borrowing, and then the COVID-19 pandemic sent Fiji’s debt soaring above 90 per cent of GDP.
However, at the time the economy suffered a massive contraction of more than 15 per cent (in 2020) as the Government stepped in to cushion the crisis causing debt levels to explode. By July 2022, the public debt peaked at 90.7 per cent of GDP, nearly double the pre-pandemic level.
A brief period of economic rebound and some fiscal tightening saw this debt-GDP ratio fall to 79.0 per cent by mid-2024, leaving Fiji more indebted today than it was ten years ago.
The new budget’s heavy deficit spending is set to push debt back up toward 80 per cent of GDP taking the government debt to $11.70b by July 2026.
In other words, the nation’s debt load in nominal terms will have roughly doubled in seven years that is, twice as much as $5.7b in 2019.
One renowned monetary economist politely remarked that the entailing debt level was worrying, but it would be passable as the government deficit is more likely to decline in years to come and perhaps reach surplus post 2027 or more so in the next 10 years.
Fiji has essentially not run a fiscal surplus in over 20 years, consistently financing spending gaps with loans – domestic or external.
Even before the pandemic, annual budgets often ran deficits on the order of 3–5 per cent of GDP, and gross borrowing needs (including rollovers) averaged about 7 per cent of GDP during 2010–2019.
This chronic habit of living beyond our means has now collided with the huge debt overhang since the COVID-19 pandemic.
The Ministry of Finance reports that public debt declined from its peak (helped by strong post-COVID GDP growth of ~18 per cent in 2022–23), and they highlight a commitment to resume fiscal consolidation in the medium term.
However, the choice to loosen the purse-strings in 2025 suggests debt reduction plans are being deferred, potentially jeopardising earlier targets to bring debt below safer levels of under 70 per cent of GDP in the next 5-7 years.
The risk implications of an 80 per cent debt-to-GDP ratio is significant.
This means a large chunk of government revenues will go toward servicing debt (interest payments and principal), leaving less fiscal space for development needs.
The current vulnerability and development deficiencies present a damning scenario in an event of a severe external shocks – a spike in global interest rates, a natural disaster or a global conflict could rapidly worsen debt dynamics putting the government in a stiff constraint.
With this budget, the government is essentially betting that higher growth from the consumption stimulus will outpace the growth of debt – a terribly misplaced logic. If that bet fails, future budgets may face painful adjustments in the near future. The opposition MPs have pointedly reminded the government in the past that Fiji’s debt worsened only due to extraordinary shock during the Winston Cyclone and the COVID-19 Pandemic.
The opposition argue that the emergency has passed and that a decisive return to prudence was necessary. From this perspective of debt sustainability, running a high deficit of more than 6 per cent when the national debt is already 80 per cent of GDP leaves very little room for its support.
Unfortunately, the prospect of a fiscal buffer amid delays in stabilising Fiji’s public finances now appears uncertain, which is on the contrary to what ANZ Economist Kishti Sen seems to suggest by saying, “… there is a real chance of achieving surplus budgets and start paying down debt in the next 10 years”.
Goodies galore: Social spending and giveaways
The 2025/26 budget has been packed with an array of populist “goodies” – increased benefits, subsidies, and tax cuts that directly put money into people’s pockets. These measures target a broad swath of social groups, which is why many have nicknamed it a “people’s budget.”
Some of these headline giveaways and social support initiatives include: (INSERT TABLE)
The total cost of which is likely to exceed $970m, including revenue losses from reduction in duties.
It’s easy to see why the government is touting these measures as proof that it cares for the “ordinary people.” The Consumer Council of Fiji lauded the budget as “a timely and decisive response” to the financial strain on households. Indeed, the cost-of-living support package is worth over $800m (16.6 per cent of total government expenditure) in direct assistance according to the Ministry of Finance – a huge sum in a small economy. However, the breadth of the giveaways also suggests a political calculus. By spreading benefits so widely, the coalition government (elected in late 2022) is arguably trying to shore up support across nearly all segments of society before the next nation election in 2026. Civil servants, welfare recipients, students, farmers, landowners, pensioners — all are receiving cash or investment related subsidies. Such expansive generosity naturally raises questions: why all this now? Fiji has endured high living costs for years and in particular last two years.
The opposition MPs note that “people have been crying out for relief for months and years” and the government acts only when it becomes “politically necessary”.
Lack of structural reforms and oversight
One of the most pointed criticisms of the 2025 budget is that while it splashes out cash, it lacks corresponding reforms to ensure the money is well spent or to address underlying inefficiencies. The focus seems to be on immediate distribution of benefits rather than long-term policy change. For instance, apart from the tax tweaks, the budget announced no major new revenue measures or public sector reforms or even reduction of resource wastages.
In fact, the biggest tax move was the reduction of VAT, which narrows the revenue base and makes Fiji more dependent on borrowing to fund government’s contemporary expenditures. This goes directly against the advice of Fiji’s Fiscal Review Committee and international advisors (WB; IMF, ADB Etc), who have urged broadening of the tax base and consolidation of government finances to reduce debt risks.
By choosing populist tax cuts and spending, the government has deferred tough decisions on revenue diversification or trimming bloated expenditure programs.
Oversight of the swollen spending is another area of concern. In the past, Fiji’s budgets included certain items under “R” (requisition) – funds that required specific approval by the Finance Ministry before they could be spent. This was a centralized control and oversight mechanism to cut-down on waste. In this budget, the Minister eliminated all “R” items, granting ministries full access to their budgets in order to “streamline processes and reduce bureaucratic delays.” While this could improve allocative efficiency in theory, it relies heavily on trust that ministries will spend responsibly. The Finance Minister stated that this will be “underpinned by stronger monitoring and policy oversight from the Ministry of Finance.” His argument that the new system (an upgraded) Financial Management Information System (FMIS) would automate the budget process and would track spending better is not backed by any procedural or practical improvement.
The positive outcome from this remains to be seen. The positive outcome from this remains to be seen. Indeed, how effective these technical fixes will be in preventing misuse or politically motivated spending as the election nears is not predictable.
Loosening formal controls without proven oversight raises the risk of funds being spent on low-value or vote-buying projects. The timing – relaxing spending restraints in an election-focused budget – naturally invites skepticism. Notably, while the government has been very vocal about monitoring prices in shops to ensure businesses pass VAT and duty cuts to consumers, there has been relatively little said about monitoring the outcomes of its own spending surge. For example, hundreds of millions are being poured into education, infrastructure, and welfare — but the budget speech and documents provide few concrete accountability measures or efficiency targets.
The National Price Monitoring Taskforce comprising of Consumer Council, Commerce Commission and the tax authorities will vigilantly police supermarkets for price gouging to protect consumers. Yet, who will police the government programs to make sure that the free medicines reach clinics on time, the subsidised bus fares are properly reimbursed, or the increased school grants lead to better education outcomes?
Increasing the Police intake which is meant to provide a better sense of security to the public, but whether this will indeed eventuate in any specific form or outcome, is not clear.
The budget seems to assume that simply allocating funds generously will solve problems, but without strong monitoring, there is a huge risk of “leakages” (wastage or even corruption) undermining these expenditures, which the opposition parties have been harping on about FFP Government. Past audits in Fiji — or the lack thereof — have revealed issues such as inflated project costs (particularly in infrastructure spending) and numerous unaccounted expenditures across ministries, pointing to massive waste of public funds.
Another gap is the lack of future-oriented policy reform accompanying the giveaways. For example, reducing VAT will help consumers now, but it also removes a significant revenue stream – how will the government make up for this loss in the coming years? There is no clear plan, apart from hoping that a stimulated economy yields higher tax takings elsewhere (which is uncertain). Similarly, generous public sector remuneration increase address immediate morale and cost-of-living concerns, but there is no mention of right-sizing, modernising or improve productivity of the civil service.
A mere mention of digitalisation is insufficient to implement meaningful efficiency reforms.
The infrastructure spending increases were not paired with reforms to procurement or project management to ensure value for money.
In short, the budget’s approach is more consumption-driven than practical reforms.
Fiji’s economy certainly needed stimulus after the COVID shock, but it also needs structural fixes (such as diversifying beyond tourism, improving state enterprise performance, broadening the tax base, climate-proofing infrastructure, rejuvenating agriculture and more).
On those fronts, the budget was largely silent, aside from general statements about building domestic industry and resilience.
This lack of structural reform initiative means that while people may feel relief in the short run, the underlying vulnerabilities in Fiji’s economy and public finances remain unaddressed.
People’s budget or political ploy?
Unsurprisingly, the expansive 2025/26 budget has kicked a silent war among concerned citizens. The government insists that it is simply doing the right thing for the people, providing overdue relief in tough times. Finance Minister Prasad claimed his government had guided Fiji to a better economic position and that this budget would “sustain economic momentum and safeguard livelihoods.” The budget’s official theme leans into being socially responsive and pro-growth, not overtly saying anything about elections. Supporters like the Consumer Council have applauded measures such as the VAT cut as “bold and necessary” for consumers, and even some economists have noted that with global uncertainties, a bit of fiscal expansion can be justified to protect against a downturn. In other words, proponents argue this as a truly “people’s budget” in substance, not just in name, because it prioritises citizens’ immediate needs.
On the other hand, the opposition politicians and critics see cynical motives in this expansionary budget. They have explicitly branded the 2025/26 budget as an “election budget” full of freebies. One opposition MP, Ketan Lal, lambasted the budget as “a desperate cloak for scandal” designed purely “to appeal to voters ahead of elections in 2026”. The skepticism is that the ruling coalition held off the major giveaways until it was closer to the election, so that the boost in public sentiment would be fresh when votes are cast.
Indeed, many of the programs (bus fare discounts, cash grants, etc.) are scheduled to deliver benefits right up to the eve of the election. Those who understand believe that the budget is more about short-term appeasement and hardly anything about economic growth or development.
These narratives contain some truth. The budget will undeniably put more money in ordinary Fijians’ wallets in the short term – it is hard to oppose cheaper food, lower taxes, or extra cash for families in need.
These are popular measures and may genuinely alleviate hardship in the short run.
However, the trade-offs cannot be ignored: Fiji is borrowing heavily to fund these policies, pushing debt back toward unsustainable levels, and the budget lacks a clear roadmap for economic recovery or debt sustainability.
The fact is, without definitive economic reforms or improvements in public funds management, today’s giveaways could become tomorrow’s fiscal headache.
Fiji’s recent history (and indeed that of many countries) shows that election-driven spending splurges often lead to painful austerity measures later when the bills become due.
As an example, the government’s own Medium Term Fiscal Strategy had initially aimed for deficits around 2–3 per cent of GDP by 2026 to gradually bring down debt, but this budget blows that target out of the water, putting future budgets on a tight belts – a politically difficult task.
Expenditure controls and efficiency statements
The supplement does point out statements such as:
1) Boost public spending efficiency: Increase the efficiency of public expenditure to control the growth of expenses at sustainable levels – to avoid wasteful spending;
2) Right-size the civil service to undertake a holistic review of the civil service and contain the public sector wage bill to ensure fiscal sustainability of the government payroll;
3) Tighten operational spending and impose stricter control on day-to-day operational expenditures such as travel, communications, trainings, workshops, fuel, maintenance, office supplies etc.;
4) Key performance indicators (KPIs) for agency heads and Permanent Secretaries tied to cost-cutting targets;
5) Retarget social assistance and restructure the social protection framework to prioritise the most vulnerable segments of society and reform existing subsidy mechanisms;
6) Stricter project appraisal to conduct proper investment appraisal and project selection for all new capital projects objectivising public priorities.
While all these and more sound soothing, the real systemic mechanisms for these to be implemented are missing.
Statements such as implementation of “stronger oversight of SOEs” does not have any practical mechanism for actual implementation of the system.
The use of Fiscal Risk Assessment Tools (FRAT), or equivalent mechanisms for co-ordination with the Ministry of Public Enterprises, has long been acknowledged, but their effectiveness remains ineffective or to say the least, unclear.
Even the statement that the Government will continue to effectively manage contingent liabilities with stringent monitoring of activities of guaranteed entities to ensure minimal fiscal risks makes no difference since this is an old rhetoric that has been used ad infinitum at budget times.
In practice, this means tighter oversight of any organisation or loan that the state has guaranteed, so as to prevent defaults or mismanagement that would hit the public purse
Conclusion and policy remarks
Fiji’s 2025/2026 national budget walks a fine line.
It is undoubtedly a people-focused budget in its content, channeling substantial resources into social support, tax cuts, and development projects that touch every community. Yet, the timing and scale of the deficit spending give it the clear hallmarks of an election year budget — one that prioritises immediate political gains over longer-term fiscal stability.
The 6 per cent of GDP deficit and near-80 per cent debt ratio are stark reminders that generosity today comes at a cost tomorrow. For the budget to truly benefit the people in the long run, the government will need to follow through with diligent implementation, monitoring, and a plan to restore fiscal health post-2026. Will the “People’s Budget” be remembered as a turning point that uplifted Fijians, or as a short-lived splash that left the nation deeper in debt? The answer may only become clear after the 2026 elections, when Fiji confronts the dual reality of happier citizens and a heavier public debt burden.
As of now, what’s certain is that the budget has opened the spigots of spending – and whether that is viewed as a kindness or a cynical calculation depends on where one sits in Fiji’s political divide.
n DR BALJEET SINGH is an Associate Professor, USP and DR SUNIL KUMAR is an economist The views and opinions expressed in this article are those of author’s and not the institutions at which they are employed or this newspaper.
