Government’s ability to support the economy during periods of slower growth is becoming increasingly constrained as public debt and government spending continue to rise, says Reserve Bank of Fiji Governor Ariff Ali.
Speaking at the State of the Fijian Economy Dialogue, Mr Ali said Fiji was facing a challenging economic environment marked by higher living costs, a widening fiscal deficit and growing public concerns over a range of social and governance issues.
“Our people have to pay more for it, so the cost of living has gone up,” he said.
Mr Ali noted that Fiji was recording one of its largest budget deficits outside of COVID-19.
“On the other hand, we have one of the largest deficits this financial year, 6.4 per cent. If you exclude the COVID years, this is the largest,” he said.
He revealed that Fiji’s debt-to-GDP ratio was expected to reach close to 84 per cent by the end of the financial year, while government expenditure had increased from around $3.5 billion to $4.8 billion under the current budget.
Mr Ali warned that the country’s high debt levels were limiting the Government’s capacity to use spending as a tool to stimulate economic activity.
