Finance Minister Esrom Immanuel says Fiji’s 2026-2027 Budget maintains a higher fiscal deficit as a temporary response to the global fuel crisis, while outlining a longer-term strategy to reduce borrowing through economic growth rather than higher taxes.
Presenting the Budget in Parliament, Mr Immanuel said the Government had set the fiscal deficit at 7 per cent of GDP to cushion the impact of lower revenues caused by the global fuel crisis and economic slowdown.
“Mr Speaker Sir, for this Budget we have kept the fiscal deficit at 7 percent of GDP as a countercyclical response to the global fuel crisis.”
He said the higher deficit was necessary to maintain government spending despite revenues falling by around $200 million while accommodating an additional $200 million in new expenditure.
Mr Immanuel said that without the decline in revenue, the deficit would have been below 5 per cent of GDP, while public debt would have been around 83 per cent of GDP.
Although defending this year’s deficit, the Finance Minister said the Government’s medium-term objective was to reduce it to around 3 per cent of GDP.
“With a 3 percent deficit, our debt to GDP ratio will decline much faster and Government will be able to finance its deficit without putting pressure on the domestic market or getting overly reliant on external debt.”
Mr Immanuel said there were only two realistic ways to reduce the deficit — either reduce expenditure or increase revenue.
However, he firmly rejected raising taxes as the solution.
“But we cannot and should not try to increase our revenues by merely increasing taxes. That is not an option as it will worsen the cost-of-living challenges, further add to the cost of doing business and slow down the economy further with negative consequences for all.”
Instead, he said the Government’s strategy was to expand the economy, creating a larger tax base while maintaining a stable tax regime.
“We have to keep our tax regime stable, with focus placed on supporting the private sector to take the lead.”
Mr Immanuel said Government would work to create a more enabling business environment by streamlining approval processes, removing bureaucratic red tape, addressing skills shortages, improving productivity and competitiveness, tackling the country’s drug and HIV crises, and supporting economic diversification through new businesses and industries.
He also called on Fiji’s major institutional investors, including the Fiji National Provident Fund, Fijian Holdings, BSP Life, Unit Trust, Provincial Councils and other investors, to play a leading role in financing economic expansion.
The Minister said major state-owned entities, including Energy Fiji Limited, Fiji Airports Limited, Fiji Ports Corporation Limited, Fiji Roads Authority and the Water Authority of Fiji, would be expected to provide the infrastructure needed to support future growth.
He added that public investment would complement private sector activity through increased spending on roads, bridges, jetties, water and wastewater infrastructure, health facilities, housing, drainage and waste management.
Mr Immanuel said Government would also prioritise strengthening public sector capability to deliver major infrastructure projects efficiently and ensure value for money.
