Westpac has questioned whether Government ministries and departments can absorb a 10 percent reduction in operating grants without reducing services or restructuring their operations, while also raising concerns over Fiji’s continued underperformance in delivering capital projects.
In its review of the 2026-2027 National Budget, Westpac noted that inflationary pressures could make it difficult for ministries to absorb lower operating allocations.
“Given rising inflation, can ministries/departments realistically absorb a 10% reduction in operating grants without cutting or reorganising their overheads?”, states Westpac.
The bank noted that many of the Government’s key support measures had already been announced before Budget Day, including fuel duty concessions for Energy Fiji Limited, bus operators, hotels, resorts, mining companies and manufacturers reliant on diesel generation.
It said these concessions were proactively extended until October.
Westpac also highlighted several targeted initiatives introduced in the Budget, including incentives for peer-to-peer lending platforms, equity crowdfunding, electric vehicle charging infrastructure, sporting development, and increased iTaukei participation in commercial investments.
However, the bank said the review of the previous financial year’s performance again highlighted concerns over the implementation of capital expenditure.
Operating expenditure was largely delivered, with revised estimates reaching approximately $3.9 billion, representing 99.3 percent of the Budget.
Capital expenditure, however, fell well short of expectations.
“Revised estimates indicate capital spending of $792.3 million, meaning around $134.3 million of planned capital works and investments might not be delivered.”
Westpac said part of the shortfall may have resulted from the restructuring and merging of ministries during the fiscal year.
It warned that the recurring trend continues to raise questions about the Government’s ability to convert budget allocations into productive infrastructure outcomes.
“This pattern continues to raise concerns about the Government’s ability to fully translate budget allocations into productive infrastructure outcomes.”
The bank also noted a continued deterioration in the composition of Government spending, with the balance between operating and capital expenditure now standing at 82:18, indicating a growing share of spending is being directed towards operational costs rather than long-term investment.
