Fiji’s public debt remains one of the country’s most significant economic vulnerabilities, with the Government warning that high debt levels continue to limit fiscal flexibility and place pressure on living standards.
The assessment is contained in the Pre-Election Economic and Fiscal Update released by the Ministry of Finance on June 7.
According to the report, Government debt is projected to reach $11.31 billion, equivalent to 81.3 per cent of GDP, by the end of July 2026.
While this is below the pandemic-era peak of more than 90 per cent of GDP, the Ministry acknowledged that debt remains substantially higher than pre-COVID levels.
“Government debt remains a critical macroeconomic vulnerability for Fiji and is projected to reach $11.3 billion, equivalent to 81.3 percent of GDP, by the end of July 2026,” the report states.
The Ministry noted that Fiji’s debt burden increased sharply during the COVID-19 pandemic as Government resorted to significant borrowing to finance essential expenditure while revenues declined.
Debt-to-GDP rose from 48 per cent before the pandemic to 90.6 per cent by the end of FY2021-2022, remaining more than 30 percentage points above pre-pandemic levels.
Although the debt ratio has since improved due to economic growth, the report warns that elevated debt continues to constrain policy options.
“the elevated level of public debt continues to constrain fiscal policy space and place pressure on living standards.”
The report also highlights growing debt-servicing costs, with interest payments consuming an increasing share of national resources.
As debt levels have risen, Government borrowing has become more expensive, particularly as concessional financing becomes less dominant within the debt portfolio.
The Ministry further warned that Fiji remains exposed to foreign exchange risks because a significant portion of external debt is denominated in foreign currencies.
External debt denominated in US dollars accounts for 85.8 per cent of total external debt, while Japanese yen accounts for 5.8 per cent and Chinese yuan 8.4 per cent.
The report cautions that unfavourable exchange rate movements could increase debt-servicing costs and place additional pressure on Government finances.
The Ministry also referenced the International Monetary Fund’s latest Article IV Consultation, which concluded that Fiji remains at moderate risk of debt distress despite its debt being assessed as sustainable.
However, the report notes that weakened fiscal buffers reduce Government’s capacity to respond to future economic shocks, natural disasters or other unforeseen crises.
The update warns that should additional fiscal support become necessary, the scope for meaningful intervention may be constrained by Fiji’s already elevated debt levels.
