Page 10 - IB April 2023

Fiji Fiji

FIJI ECONOMIC SUMMIT:

BALANCING INCLUSIVITY AND REALPOLITIK

By Samantha Magick Public Service Association saying it “borders on insanity.”
However, there was a sense at the summit, that the govern-
The first Fiji Economic Summit in 16 years has produced ment and its advisers believe it was time to ‘take our medi-
a substantial list of suggestions and requests from industry, cine.’
community and political participants, which they hope will The final communique “underscored the importance of
inform the upcoming national budget, and the economic carefully managing the speed, quantum and timing of fiscal
planning agenda to come. consolidation.”
In the leadup to the summit, there were questions over the
estimated FJ$360,000 budget allocated for the event (al- Governance is everything
though in the end, corporate sponsorship covered a significant Lawyer Richard Naidu is chairing the Fiscal Review Com-
portion of the costs), the need to hold it at Suva’s glitziest mittee, which has been asked to examine the overall setting
venue and the cost of delegates’ kalavata (matching shirts). of the Government’s fiscal policy, make recommendations on
Labour Party leader and former Prime Minister, Mahendra how the government can rebalance its revenue and spending,
Chaudhry declined his invitation—saying the outcome was find avenues for economic growth and ensure that Govern-
predetermined—as did FijiFirst opposition parliamentarians. ment can fiscally sustain itself over the next decade. He
At the other end of the spectrum, participants such as VOU reminded delegates that “governance underpins everything.
founder, Sachiko Soro, said she was privileged to take part: It is the foundation of everything we are trying to do. If we
“I just feel like the doors have been smashed wide open and don’t get that right, we won’t get anything right.”
all of a sudden our expertise is being tapped into and there is The summit working group he chaired also noted that
a real sense of hopefulness in the air that together, when we legal and constitutional processes must allow for scrutiny of
pool our skills and resources, there is an actual chance of us government.
really propelling this country forward.” “The executive must be fully, legally accountable for its ac-
tions and its administrative decisions,” he said.
The context: Public debt
The summit came days after the World Bank publicly re- Infrastructure and public services
leased its review of Fiji’s public expenditure. Intermittent water and energy supply are the bane of many
That report revealed that public debt skyrocketed to 90% of businesses and households in Fiji’s urban and peri-urban
Fiji’s GDP in 2022, and that if left unchecked, the debt levels areas.
could threaten the country’s ongoing economic recovery. Reporting back for the thematic group that looked at
While COVID-19 and multiple cyclones contributed to this energy, the Global Green Growth Institute’s Pacific Regional
surge, there were concerns even before the pandemic over Advisor, Katerina Syngellakis, told the summit that Fiji had
the debt burden. not had a national energy policy endorsed by cabinet since
The Bank said revenue estimates in the FY23 budget “ap- 2006, despite several attempts to do so, and that this should
pear optimistic without supporting reforms and [near] spend- be prioritised.
ing freeze in nominal terms until FY30 would risk undermining She noted that the private sector is ready to invest, and
growth, service delivery, and investments in climate and financing is available, that policies exist but are not being
disaster resilience.” implemented, and that there is an over-reliance on hydro
It recommended ambitious fiscal consolidation, suggesting: electricity and more diversification is needed.
an increase in VAT to a blanket 15% (with no exemptions) and One of the key recommendations was an expanded role for
increased social assistance transfers to compensate low- the private sector in specific areas such as off-grid supply.
income households, a lowering of the tax-free threshold, ex- The transport working group noted that there is a serious
pansion of the excise tax regime (for example, through higher road congestion problem and called for incentives for clean
taxes on alcohol, fuel and sugar products), a full phase-out of transport and modernisation of fleets, and for investment in
sugar industry subsidies, restoration of higher departure tax electric vehicle charging infrastructure to be included in the
rates, and improved revenue administration. upcoming budget. It also suggested the immediate develop-
Furthermore, the Bank recommends immediate phasing out ment of a decarbonisation pathway for transport, and revival
of pandemic support payments, reinstatement of full pension of a local shipbuilding and repair industry.
contributions and says the growth of the civil service wage bill
needs to be moderated. Labour market pressures
Many of these recommendations are politically unpalatable, Many delegates to the summit spoke about labour market
particularly the suggestion that VAT be increased, with the Fiji pressures their sectors are experiencing. Last year 22,000

10 Islands Business, April 2023