Debt reduction unlikely
10 June, 2023, 11:15 am
THE Government is not, and will not in the foreseeable future be, in a position to reduce Fiji’s nominal debt number about $9.5 billion as of January 31, 2023, states Fiscal Review Committee.
The committee states in the past years, the Government has consistently spent more money than it collected, resulting in government deficits.
“Deficits themselves are not necessarily bad, as long as they do not lead to unsustainable levels of debt. So if the Government can keep its deficits (as a percentage of GDP) below the rate of GDP growth, it follows that the debt to GDP ratio will fall,” the committee said in its report.
“That is what agencies such as the World Bank are asking it to do. Clearly, this has not been happening.
“Well before the COVID-19 pandemic, the Government was running deficits, in GDP terms, well above the rate of economic growth, even as capital expenditure — the government’s investment in our future was falling.
“Government must set its debt to GDP ratio target to less than 70 per cent in 10 years’ time, show that it is committed to doing it and that it is prudently managing both the economy and its own spending.”