FIJI will need billions of dollars to strengthen its resilience to climate change, with the Government facing the challenge of financing critical infrastructure and adaptation projects without pushing public debt to unsustainable levels.
The World Bank Group’s recently released Country Climate and Development Report (CCDR) estimates Fiji’s additional climate financing needs at between 4.8 per cent and 7.8 per cent of gross domestic product (GDP) annually from 2026 to 2050.
The report says traditional borrowing alone will not meet these needs, requiring a combination of international assistance, domestic fiscal reforms and private sector investment.
“This amounts to $US411million to $US647million ($F925m to $F1.456trillion) in each of the five years from 2026 to 2030 and $US326million to $US547million in each of the 20 years from 2031 to 2050,” the report states.
It says financing needs will be higher in the near term, driven largely by costly upgrades to existing infrastructure and efforts to reduce emissions in the energy and transport sectors.
The report estimates potential additional financing sources at an average of 3.1 per cent of GDP annually, equivalent to about $US249million ($F560m), between 2026 and 2050 under both investment scenarios.
Much of this funding is expected to come from international public finance and potential revenue from higher duties on imported fuel.
“Carbon finance is likely to be relatively limited, however, there is an opportunity to further utilise green and blue bonds.”
The report also notes that the Government has limited fiscal space, highlighting the need to increase revenue or consolidate spending to support climate investment.
Green and blue bonds could help attract investors to climate-related projects, while concessional loans and donor grants would provide alternative funding sources.
The report also points to domestic reforms, including broadening the revenue base, phasing out inefficient fossil fuel subsidies and strengthening public financial management, as ways to create more room for climate spending.
Debt-for-climate swaps and risk-sharing facilities could further ease repayment pressures and free up resources for resilience projects.
Fiji’s financial sector could also help bridge the funding gap.
“Fiji’s financial sector is deep relative to SIDS (Small Island Developing States) peers and could help to close the climate financial gap.”
Financial sector assets totalled 269 per cent of GDP in mid-2024, with commercial banks accounting for 41 per cent and the Fiji National Provident Fund holding 29.8 per cent.
“Channelling even a small share of financial sector assets to climate finance could go a long way to close the climate finance gap.”
The report emphasises the need to mobilise diverse funding sources while maintaining fiscal sustainability as Fiji prepares for escalating climate risks.
