Westpac says Fiji’s 2026–2027 Budget relies heavily on external borrowing, warning that delays in securing overseas funding could place renewed pressure on Government finances.
In its Budget review, the bank noted that Government plans to finance a gross funding requirement of $1.48 billion, comprising a $1.04 billion fiscal deficit and $436.3 million in debt repayments.
While domestic borrowing remains the largest funding source, Westpac said Government is budgeting for a much larger contribution from external lenders than in recent years.
“Government is budgeting for a significantly larger contribution from external partners than in recent years.”
The report shows $628 million, or 42.4 percent of total financing needs, is expected to come from overseas sources, with domestic borrowing contributing $853.9 million, or 57.6 percent.
The Asian Development Bank (ADB) is expected to provide $511.8 million, accounting for more than 80 percent of all external financing.
Additional funding is expected from the World Bank and IDA ($55.9 million), the Australian Infrastructure Financing Facility for the Pacific ($7.5 million), the OPEC Fund ($6.9 million) and IFAD ($1.5 million).
Westpac, however, warned that the financing strategy remains exposed to significant execution risks.
“The financing assumptions remain exposed to significant execution risks.”
The bank noted that during the previous financial year, Government struggled to secure planned overseas funding due to delays in policy reforms.
By April, only $44.7 million in foreign financing had been secured, representing just 8 percent of the revised external financing target of $559.3 million.
As a result, Government relied on its cash reserves to fund expenditure, with deposits in commercial banks falling to $600 million in May from levels previously close to $1 billion.
In contrast, domestic financing remained strong, with Government raising $789.9 million, equivalent to around 85 percent of its annual domestic borrowing target.
Westpac also observed that Government appears to be extending the maturity profile of its domestic debt by issuing more 25-year bonds, reducing refinancing risks while better matching long-term borrowing with infrastructure investment and meeting the investment needs of institutions such as the Fiji National Provident Fund (FNPF).
Despite this, the bank cautioned that heavy reliance on policy-based lending—particularly from the ADB—means any delays in approvals or loan disbursements could force Government to borrow more heavily from domestic markets, increasing pressure on local liquidity.
