Acting Prime Minister Aiyaz Sayed-Khaiyum says the Macroeconomic Committee recently released the revised economic growth numbers with a double-digit growth projected for this year which may be the highest ever growth experienced in Fiji's history.
Sayed-Khaiyum says an 11.3% growth is projected for this year, 8.5% growth in 2023 and 7.7% growth in 2024.
He says we suffered a serious pandemic-driven blow in 2020 with the largest economic contraction ever of 15.2%. Economic contraction in 2019 was -0.4% and contraction in 2021 was 4.1%. Sayed-Khaiyum says this turnaround was only possible due to their concerted effort to secure vaccines early, effectively rollout those vaccines, and reopen our borders and the economy.
He says at end of 2021, foreign reserves stood at $3.2 billion equivalent to 9.9 months of import cover.
Sayed-Khaiyum says this is the first major crisis during which we have not had a balance of payments or foreign exchange problem or a devaluation.
The Acting Prime Minister says this is despite the closure of our largest foreign exchange earner, tourism, which brings in about $2 billion annually.
Sayed-Khaiyum says that's why Government also borrowed from external sources like ADB, World Bank, AIIB, JICA and sourced budget support grants from Australia and New Zealand.
He says had the Government not borrowed externally there would have been a very high risk of a devaluation.
The Acting Prime Minister also says Government’s Debt to GDP ratio rose from 53.3% in 2006 to 56.2% in 2010.
He says following this, the Debt to GDP ratio was on a steady downward path declining to 43.5% in 2016 to 2017.
Sayed-Khaiyum says then we had TC Winston and many other natural disasters that required additional borrowing with the Debt to GDP ratio rising to 48.4 % in 2018 to 2019. He says fast forward to the COVID-19 pandemic, tax revenue fell by 50% on average every month which resulted in a 12-month loss of over $1.4 billion.
The Acting Prime Minister says the economy experienced the largest ever contraction of 15.2% in 2020, a loss of GDP equivalent to almost $2 billion.
He says Government had to increase its borrowings to sustain public expenditure and provide over $500 million in unemployment support and other relief measures.
Sayed-Khaiyum says this led to an increase in the level of debt.
For 2020 to 2021, the Debt to GDP ratio would have been 14.4 % lower if we assume nominal GDP remained at 2018/2019 levels (pre-COVID).
He says, therefore, once the economy recovers to pre-COVID levels, Debt to GDP levels will fall.
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