THE Government’s $200million guarantee for Fiji Airways was unanimously approved by Parliament yesterday, despite acknowledgement that taxpayers could ultimately bear the cost if the national airline fails to meet its debt obligations.
Member of Parliament and former finance minister Professor Biman Prasad said the guarantee was not a direct cash injection but a contingent liability that could be triggered if Fiji Airways could not repay its debts.
“For the benefit of the people, a government guarantee is not necessarily Government providing direct cash support to the airline,” he said.
“It is a guarantee, it is a contingent liability in the sense that it is contingent upon, the liability is only called on if the airline or if the entity being provided the guarantee is not able to meet its debt obligations or repayment obligations.”
Prof Prasad acknowledged the risk to taxpayers if Fiji Airways failed to meet its obligations.
“There’s always a risk to the taxpayers, to the Government, you know, in terms of a situation where a particular entity, which Government guarantees, is not able to meet the repayment, the Government will have to bear that cost.”
However, he said he did not believe Fiji Airways posed such a risk.
“But in terms of Fiji Airways, there is no such risk, or remotely, there is no such risk as far as Fiji Airways is concerned.”
The unanimous approval gives the Government the backing to proceed with the $200m guarantee while placing continued emphasis on the airline’s financial management and accountability.
