GROWING Fiji’s economy through the private sector is the “short and simplest solution” to addressing the country’s rising government debt, according to RBF Governor Ariff Ali.
Speaking during the Fiji Australia Business Forum, he said government expenditure had increased substantially, rising from about $3.3billion in 2022-23 to a projected figure of just below $4.9billion this financial year.
He said government revenue had also increased, partly due to economic growth and higher taxes.
However, the Government’s deficit was projected at seven per cent of GDP, which Mr Ali said would be one of the largest outside the COVID-19 years.
He said deficits were also projected for the following two years, while government debt was expected to reach about 85 per cent of GDP by the end of this financial year.
“One of the concerns from the Reserve Bank’s perspective of what we look at is how do we manage this debt?” Mr Ali said.
“To me, the short and simplest solution is grow the economy and make sure it’s driven by the private sector.”
Mr Ali said the RBF had maintained an accommodative monetary policy over the past five years to support economic growth, despite advice from the International Monetary Fund to tighten monetary policy.
He said interest rates remained at historical lows, with most corporates borrowing at rates of between three and 3.5 per cent.
He said the accommodative monetary policy appeared to be supporting private sector growth, which now stood at 14.6 per cent.
“If you talk to any economist, they will tell you that private sector growth of 14.6 per cent is very strong and very robust.”
