SUVA (FIJI GOVT)—There’s no need to be alarmed about Fiji’s debt level, the International Monetary Fund (IMF) has found after its annual assessment on Fiji’s economy.
However, it advised the need to “rebuild fiscal space” or to reduce the debt level further in order to give Fiji more room to borrow in case of significant economic shocks such an extremely destructive cyclone.
“The authorities rightly target a continuing reduction in the public debt-to-GDP ratio to 75.7 percent in 2027.
The revenue measures last year have put debt on a downward trajectory…while the risk of debt distress is still assessed as moderate, the fiscal space to absorb potential shocks would remain limited,” IMF Mission Chief for Fiji, Asia and the Pacific, Marshall Mills said in a media conference yesterday following the completion of IMF’s 2024 Article IV Mission to Fiji.
The IMF mission recognised improvements made by Fiji through budgetary measures that helped bring debt down from over 90 percent during COVID to the current level of around 80 per cent of GDP.
“The fiscal position and debt-to-GDP ratio have continued to improve significantly, thanks to the recovery and revenue measures in FY2023-24 budget.
“The fiscal deficit is expected to decline to 4.4 percent of GDP in 2024, down from 5.9 percent in 2023, while public debt has fallen from a peak of 91.5 percent of GDP at the end of 2021 to 80.4 percent at the end of 2023,” Mills said.
The mission, which is projecting a three per cent growth for Fiji this year, is also recommending Government tackle key bottlenecks in the economy that stifle growth “particularly labour shortages and red tape”.
“The Government is aware of this and is undertaking efforts to address both of them, for example by streamlining the processes for targeted immigration of skilled labour to offset the impact of emigration,” Mills said.
Last week, the World Bank also released its biannual Pacific Economic Update on 11 economies in the Pacific region and it found Fiji’s debt to be among “the highest” in the region.
It also recognised the declining trend of Fiji’s debt since 2022 “in line with revenue-based fiscal consolidation.” …PACNEWS