The Fiji Government has delivered a FJ$886 million deficit budget in parliament this morning.
Deputy Prime Minister and Minister for Economy Biman Prasad says the budget is a “practical and a deeply measured national response to these extraordinary circumstances in which we find ourselves,” referring to the volatility caused by conflicts between Israel and Iran, Russia and Ukraine, the US government’s threatened tariff hikes, and geopolitical contestation.
Government intends to spend FJ$4.8 million in the 2025-26 financial year.
It expects to collect FJ$3.9 million in revenue, a reduced amount due primarily to the reduction of Value Added Tax (VAT) by 2.5% to 12.5%.
Debt
On coming into power in 2022, the Coalition Government sought to bring the debt-to-GDP (Gross Domestic Product) ratio down. At the end of July 2025, this ratio is projected to reach 77.5% of GDP and amount to FJ$10.8 million. Domestic debt represents 64.9% of this debt, with the major instruments including Fiji Infrastructure Bonds, Fiji Green Bonds, Viti Bonds and Treasury Bills.
External borrowing – for example concessional loans from the World Bank and Asian Development Bank – is 35.1%. Amongst the activity these loans will finance are a bridges infrastructure project and work to strengthen correspondent banking in the Pacific.
The budget deficit will be financed by a combination of further domestic and concessional external borrowing. By the end of July 2026, the debt-to-GDP ratio is projected at 79.8%, a 2.3% increase.
Taxes
While the drop in VAT (down 2.5% to 12.5%) is the headline news on tax, a number of other measures relating to tax compliance and self-regulation have been announced.
Businesses with a turnover of FJ$50K and above will need to register for the VAT Monitoring System (VMS) from the start of next year. The VAT registration threshold remains at FJ$100K.
An export duty of 3% will be introduced on gold and silver ore concentrates to encourage domestic value-adding and generate revenue for government.
Departure tax will increase to FJ$200, which is expected to generate FJ$20 million in revenue.
The fringe benefit tax on electric vehicles will be reduced from the start of next year.
Border protection and security
The Fiji government is responding to community concerns around the increased trafficking and domestic use of drugs and associated personal security issues with a big boost to the police workforce.
It plans to employ 1000 more police officers, and fill the 300 positions currently vacant.
It says construction of a new Container Examination Facility will improve the ability to detect drugs and other hidden contraband. It is also working with New Zealand to expand K9 (dog) detection in Savusavu, a major entry point for private vessels.
The effort will also see the government develop a Maritime Single Window and Yacht Management System.
In response to concerns that people may be using mobile wallets to receive money for illegal activities or to conceal undeclared income, all mobile wallet holders will need to provide their Tax Identification Number (TIN) when buying new SIM cards.
Finally, all registered sole traders will need to declare their assets every year, beginning in January 2026, alongside their annual tax return.