Fiji’s debt situation is not critical but a vulnerable one.
This, according to International Monetary Fund (IMF) and Pacific Financial Technical Assistance Centre (PFTAC) macroeconomic adviser Andrew Beaumont.
Speaking at the People–Centered Public Finance Management and the National Debt Workshop panel discussion on Wednesday, he also said the previous government had to pay $370million in interest on loans in 2021 and 2022 — money that could have been better spent elsewhere.
Mr Beaumont said Fiji’s high dependency on tourism was also an issue of concern.
“We know that the last three years have been tough in Fiji, we’ve had two thirds of people lose their jobs,” he said.
“A lot of people had to go back to their villages, farming, or fishing.
“Across the Pacific, we had similar stories in many countries, but Fiji was particularly hard hit because it was so dependent on tourism compared to some other countries.”
Mr Beaumont said the economic fallout from the COVID-19 pandemic would make it challenging for Fiji’s recovery, should the country be hit by a weather event.
“When they do hit a country like Fiji of course, the Government will want money to rebuild infrastructure. So having that much debt is a vulnerability — that’s how we would describe it.
“It’s not a critical problem but, on the other hand, it means that we’re less equipped to deal with the next shock that might come.”
He said over the past three years, government revenue fell quite low because people who weren’t working did not pay taxes, they weren’t purchasing and paying VAT and “Government was spending more than they were getting back”.
Mr Beaumont said the IMF’s advice to countries during the pandemic was to “maintain the spending, get through the crisis and at the other end start the process of paying down that debt”.
“Fiji’s situation is not critical but a vulnerable one. For example, if someone’s income was $100 for the year, this means that you owe $85 to someone else – that’s the situation now. He said another issue for Fiji was “having to pay interest”.
“In June 2021 and June 2022, the last figures I’ve seen, the Government had to pay $370 million in interest.
“So, think about the other services that could’ve done with that $370 million – it’s quite a lot, that is a lot of money. It’s not free money and it’s got some consequences attached.” || debvt fj || debt fji
