Fiji’s government of Frank Bainimarama is continuing with its expansionary economic policy in the $3.3 billion (US$1.69 billion) budget for 2015 it handed down in Fiji’s Parliament on November 21st. Its capital budget of U$S687m makes up 41 per cent of the total budget. More roads and bridges will be upgraded or constructed and more people will be connected to the water mains. Investment on infrastructure has been the hallmark of the Bainimarama administration in the past seven years.
This expansionary economic strategy has inflated the country’s debt to record levels. From a debt of little more than US$1.4b when it took over power in 2006, public debt has mushroomed to US$2.086b by 2014. This represents 48.3 per cent of GDP, one of the largest in the region. Comparably, PNG claims a 35.5 per cent ratio and Australia, 16.6 per cent. Heavy spending on capital works should help grow the island economy, the Fijian Government said. It is giving itself a 4 per cent growth rate for 2015, a bit slower though from the 4.2 per cent growth rate estimated for 2014. Total revenue is projected at US$1.58b, with net deficit projected at 2.5 per cent of Gross Domestic Product. Bulk of the revenue will be generated from indirect taxation with valued added tax expected to raise US$419m, or 68.9 per cent of projected operating revenue.
The country’s foreign reserves is said to be healthy, currently at US$938m, enough to cover 4.6 months of imports. Consumers of alcohol and tobacco will dig deeper into their pockets as import and excise duties on these copped a 10 to 20 per cent increase for the new year. Patrons of nightclubs and large restaurants will also have to pay service turnover tax from 2015. Tax amnesties formed part of Fiji’s national budget targeting undeclared overseas assets as well as repayments of tax liabilities both for individuals and companies. Sale of Airports Fiji Limited will be finalised in the new year as well as the corporatisation of the country’s electricity and seaport utilities.
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