Government’s planned $1.4 billion gross borrowing for the next fiscal year could get a slight bump with indications of potential guarantee calls from several financial institutions in relation to unpaid government-guaranteed COVID-19 debts.
This was revealed in the 2026-2027 national budget supplement as among the risks in its $1.7 billion contingent liabilities portfolio.
This portfolio – which comprises: Explicit Guarantees (63.9 per cent), Other Explicit Contingent Liabilities (33.1 per cent) and Implicit Contingent Liabilities (3.0 per cent) – stood at $1.7 billion or 12 per cent of GDP at the end of April, according to the budget document.
At the end of April, the Explicit Guarantee portion, which obligates Government to service debt obligations in the event of borrower default, stood at $1.131 billion (8.1 per cent of GDP).
“Several entities covered under these guarantees have been assessed as medium-to-high-risk, posing significant fiscal risks should these liabilities materialise in the near term,” the document stated.
“Some government-owned entities remain heavily reliant on Government financial support and continue to operate below breakeven levels or incur operating losses. “Default on debt obligations by these state-owned enterprises may require direct capital injections from the central Government to maintain operations and ensure service continuity.
“This could create significant financial pressures, particularly where adequate budget provisions have not been made for unforeseen defaults.
“In addition, the Government, in coordination with the RBF (Reserve Bank of Fiji), has received indications of potential guarantee calls from several financial institutions relating to unrecovered debts owed by micro, small and medium enterprises (MSMEs). As part of the COVID-19 recovery response, the Government provided guarantee support for financing extended to SMEs and MSMEs through participating financial institutions.
“While loan repayments have commenced and loan maturities have been extended to support borrowers, these facilities continue to pose risks, particularly if economic conditions deteriorate further and recovery options are exhausted.”
In his speech at the national budget announcement last week, Minister for Finance Esrom Immanuel revealed Government’s heavy exposure to the estranged sugar industry – so far, a total of $1.1billion of which $320million “may ultimately fall on the taxpayers of this country” in the coming fiscal year.
He also further revealed a planned $200 million Government guarantee for Fiji Airways “that will be brought to this Parliament soon”, to help the national carrier stay afloat.
Total Explicit Government Guarantees in its contingent liabilities portfolio at the end of April this year, according to the budget supplement, are to: Fiji Airways ($340.9m), Fiji Development Bank ($347m), Fiji Sugar Corporation Ltd ($320.2m), Housing Authority ($119.2m) and Pacific Fishing Pte Ltd ($4.2m).
Government’s projected total borrowing of $436.32 million for debt repayment in the 2026-2027 budget does not include calls on government guarantees.
