The holiday mode, unplanned spending on natural disasters and late taxes affecting Government’s bottom line have been pinned as reasons for changing Government’s financial year.
The change in dates to August 1-July 31 was announced yesterday by Attorney-General Aiyaz Sayed-Khaiyum .
The Government had been in consultation with World Bank since January on the change and had also looked at financial year models and budget cycles for other countries.
Mr Sayed-Khaiyum said a Ministry of Finance team would meet ministries next week to look at budgetary submissions because this year’s budget cycle comes to an end on July 31.
“We obviously will go to Parliament as you know the parliamentary sittings coming forward is in April, June and the next one being in August.
“We will, of course, be talking to the Honourable Madam Speaker and the Business Committee to be able to have a sitting, to bring the November sitting forward at the very least to have it in July so then we can present the budget and then debate the budget and have it ready for implementation from the first of August.”
Mr Sayed-Khaiyum said the change took into account factors affecting small island economies such as Fiji and the practicalities on the ground.
He said currently companies pay taxes to FRCA in April, June, September and December, but late payments at the end of the financial year affected budget deficits.
“Last year FRCA received taxes of $67million on the 31st of December,” Mr Sayed-Khaiyum said.
“Now what that meant was that if FRCA received their taxes on the 31st of December at 4pm or 4.30pm it does not get transferred to the Government books on that day itself.
“Because FRCA receives it late, it comes on January 1, 2016, and it affects your deficit for 2015 for example.”
Mr Sayed-Khaiyum also explained the current set-up meant some of the most important budget work took place in the festive season and this posed issues.
“Many countries, same as Fiji, suffer from what you might call Christmasitis.
“So people actually go on holiday mode. If your budget is being approved by Parliament in November or early December you will need all the ministries to stay and plan how the budget will be spent and how to utilise it. Most of the people go on holiday in December.
“People go into Christmas mode and in fact in early January too.”
“We need to ensure that when the budget has been approved by Parliament, we immediately get into the planning and implementation stages of it.
He said changing the financial year because of the cyclone season was not only practical but a form of adaptation.
“The cyclone season in Fiji starts from November and ends at the end of April so you can very well have a well planned budget that is approved in November and suddenly in a month or two it can get all out of wack.”
Mr Sayed-Khaiyum said in the same way villages had to be relocated because of rising sea levels and houses built stronger because of stronger cyclones, government policies needed to take into account the realities faced in the country.
He said Fiji was the only country to change it’s financial year to August 1-July 31, adding that other Government’s facing similar factors could follow our lead.
Mr Sayed-Khaiyum said as a result of the change, the economic growth rate predicted for next year would be recalibrated from the RBF’s downward revision of 2.2 per cent following Severe TC Winston.
He also explained there would be ramifications on Government spending because of the change
Shadow Finance Minister Professor Biman Prasad said he would comment on the change today.