Spending, deficit to increase

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GOVERNMENT expenditure and budget deficit are expected to increase in the upcoming budget which will be delivered on Friday.

Deputy Prime Minister and Minister of Finance Professor Biman Prasad said even if the debt-to-GDP ratio may have to go up, the economy would still be in a better position than what the coalition government had inherited.

“We created a physical space, and even if we have to increase the expenditure in this budget, as a domestic policy push to counter any adverse impacts of the global economic slowdown, we are in a strong position, Prof Prasad said.

“We may have to raise our deficit a little bit. We may have to raise our debt to GDP ratio a little bit, but still, it’s better than what we inherited.”

He said the Government would be spending more to look after the people.

“We would be doing a lot more in the next budget in terms of expenditure, in terms of looking after our people.

“So, that is the principle on which the budget that I will announce at 10am on Friday will be based on.”

When asked whether Fijians can expect a decrease in food prices, Prof Prasad said the cost of imported goods would go up due to increase in freight costs

“In fact, there are a lot of measures that we put in place in the last two budgets, because there are areas where prices are affected.

“Even with 22 items having zero VAT, some of the prices there have also gone up because the cost of those goods where we are importing from has gone up, freight cost has gone up.

“So, we can’t control prices of every item, even if it is zero duty, zero VAT.

“In the first budget, we reduced duties on a lot of basic food items, meat products, etc, and we saw prices go down.”

He said the overall inflation rate was also expected to go down this year.

“You look at the overall inflation rate, the policies we put in place has seen the overall inflation rate coming down this year.

“So those are good news.”