Presenting government’s Fiji Budget 2023-2024 to parliament this morning, Finance Minister Biman Prasad said the fiscal deficit of $639 million dollars was “higher than I personally wanted.”
Prasad said Fiji’s economy, however, is at a critical point.
“We must continue to cushion the blow on our people. We must catch up on all the lost years without investment in infrastructure and maintenance. If we do not do this our future path of economic growth will be affected. At the same time, we are pursuing further fiscal consolidation – that is, better value spending and cost savings – to ensure that we urgently bring down Government debt parameters to a sustainable level. But to achieve this, we will have to swallow some bitter medicine now otherwise we could end up in a worst financial situation.”
Prasad spoke of “inheriting” a public debt “almost the size of the entire economy”, and of the opportunity cost servicing that debt has created.
“Our ability to spend on capital works, maintenance, upgrades and incentivise our precious human capital that we are losing daily, is crowded out by dinau and debt.”
He also talked of a national health system on the verge of collapse, and TELS (tertiary education loan scheme) that has failed in ambition of operating as a revolving fund.
Prasad said throughout consultations in the leadup to the budget, “the strongest feedback we have received is about lowering food prices”. This has prompted the government to retain zero-VAT on some basic foodstuffs and reduce fiscal duty on others.
He also spent some time revisiting the previous government’s decision to change provisions of the Capital Gains Tax in 2021 which meant: “Any taxpayer who owed capital gains tax from a previous unexempted transaction but had not yet paid it, was now exempted from paying the debt.”
Prasad called this law “disgraceful” and said it “ended up costing the Government almost $70 million in lost revenue.”
The finance minister says the previous government failed to maintain infrastructure.
“We have put aside over $200 million dollars for maintenance of our hospitals, health centres, schools, public buildings, government quarters, roads and bridges and water infrastructure,” he said in parliament this morning.
Money has been allocated to fund the re-establishment of the Public Works Department, which will initially focus on improving rural roads, and a significant increase to the agriculture ministry, a significant portion of it for crops and livestock research and extension services to strengthen agricultural productivity. Tourism Fiji’s marketing budget has been increased.
Measures to cut costs include reductions to ministerial travel allowances.
“The road ahead will not be easy, but we are hopeful that what we have laid down in this budget today will be a strong foundation for future recovery, growth and prosperity,” Prasad said in conclusion today.
The Fiji National Budget 2023-2024 will be debated in parliament from July 10.
