The Government’s rising debt burden is limiting its ability to stimulate economic activity as growth slows, says Reserve Bank of Fiji Governor Ariff Ali.
Fiji’s debt-to-GDP ratio was approaching levels that reduced the Government’s capacity to respond to economic challenges, Mr Ali said at the State of the Fijian Economy Dialogue 2026 at the Grand Pacific Hotel in Suva.
“Our debt-to-GDP now is estimated to be very close to 84 per cent at the end of this financial year or somewhere close by,” Mr Ali said.
He said Government spending had increased significantly in recent years.
“Government expenditure has increased from somewhere around 3.3 billion to 3.5 billion to now 4.8 billion.”
Mr Ali also pointed to the size of the current fiscal deficit.
“On the other hand, we have one of the largest deficits this financial year, 6.4 per cent.
“Now, if you exclude the COVID years, this is the largest.”
He said governments around the world typically increase spending during economic downturns to support growth, but Fiji had limited room to do so.
“The biggest challenge for us right now is when our debt to GDP goes close to 84% or 85%, then we have very little space.”
“Normally when the economy slows down anywhere in the world, the government is the first one to increase expenditure to boost the economy.”
Mr Ali said responsibility for driving growth was increasingly shifting to the private sector.
“Unfortunately, we are constrained on the private sector.”
“In a period when government is unable to spend more to stimulate the economy and the private sector has to come in.”
He said the Reserve Bank had already maintained historically low interest rates to encourage borrowing and investment.
“We’ve kept interest rates at record levels. Most people in any developing country will be surprised to know that our interest rates in Fiji are historically lower than what most people in Australia, New Zealand and the US.”
Mr Ali said lending activity showed monetary policy was supporting businesses.
“And this is reflected in the fact that private sector credit growth is somewhere around 12.8%.
“So that means monetary policy is working.”
