Fiji's prime minister Sitiveni Rabuka. Photo: RNZ / Koroi Hawkins
Fiji's Prime Minister Sitiveni Rabuka has alluded that the upcoming 2023-2024 National Budget will be an unpopular, needs-based one.
The budget on June 30 is eagerly anticipated as it is
the first under the new coalition government.
It will outline the government's financial roadmap for
the future and deliver on promises made while campaigning for the 2022
"We expect that it will not be a popular
budget," the Prime Minister admitted.
"We have to make clear to the people that
Government's resources are limited, and as limited as they are, the Government
can provide for their needs depending on Government revenue."
The Prime Minister added that the government coffers
are "limited by a huge amount" for its debt repayment.
"(We can) not pay it out but will continue with
the payment programme."
Fiji is experiencing an unprecedented economic crisis,
with the World Bank reporting its debt levels reached 90 per cent of GDP last
The country is experiencing high levels of inflation,
exacerbated by low economic growth due to the global pandemic topped with
multiple severe tropical cyclones.
Deputy Prime Minister and Finance Minister Biman
Prasad told RNZ Pacific the budget will put in place measures to best address
this economic situation.
"We don't expect to bring down the debt to GDP
ratio very, very quickly; it's going to take some time.
"But we have to ensure that we adopt a fiscal
strategy which doesn't disrupt the economic recovery as well as create a
sustainable level of economic growth in the future to help bring down our debt
to GDP ratio," he said.
The goal is to sustain growth in the medium and long
term while progressively reducing the debt-to-GDP ratio.
Solutions lie in necessary actions
To raise revenue, the government has identified a
combination of tax measures, reduced wastage, and prioritised expenditure in
key sectors of the economy.
"First of all, is to look at a very clear fiscal
strategy, which means that we are going to look at how we can raise
revenue," Prasad told RNZ Pacific.
"But also not just raise revenue, how we can
spend that revenue in priority areas such as infrastructure, water, social
welfare, and improving the ease of doing business and investment in the
With a discussion of tax reforms on the table, Fijians
can expect immediate changes to their pockets when the national budget is
announced on June 30.
However, Prasad assures Fijians that any tax policies
implemented will consider the "welfare of those below the poverty line and
on the margins of poverty".
"We will craft a budget that will support
economic growth, support investment, but also ensure that we look after our
people and cushion the effect of the externally-driven rising cost of
Fiji's Fiscal Review Committee, which was set up to
develop appropriate expenditure, revenue and taxation regulations for the
country, has supported this notion.
Committee chair Richard Naidu said the committee
suggests raising revenue through increased tax collections to address the
nation's economic woes.
Naidu recommended increasing Value Added Tax to 15
percent and removing zero VAT ratings on basic items.
"We have to re-target that money as it is not
just about increased welfare spending, but it's actually targeting those
lower-income households and finding a way to deliver cash back to them,"
Naidu added that Fiji Revenue and Customs Service is
losing $FJ160 million in revenue to zero VAT ratings.
However, economist Neelesh Gounder warned the government
needs to also consider socio-economic impacts.
"Any tax reform should look at all the offers on
the table. So not just VAT, but personal income taxes, or company income
taxes," Gounder said.
"It would be a good idea to put all the taxes on
the table and see how we could reform taxes to consider increasing government
revenue or creating a more efficient system," he said.
The 2023-2024 National Budget will be announced on
Friday, June 30, after which it will be debated and voted in Parliament.