Government revenue has decreased by almost $1 billion for the current financial year and is likely to drop by almost $1.5 billion in the 2020/2021 financial year if the economy even becomes more sluggish.
Minister for Economy, Aiyaz Sayed-Khaiyum says if government revenue decreases by $1.5 billion, that would be 50 percent of the total annual revenue pre-COVID-19.
Sayed-Khaiyum says revenue in the current financial year has been buffered somewhat by the fact that the government had the asset sale of Energy Fiji Limited to FNPF that injected over $200 million into government coffers.
However Sayed-Khaiyum says revenue is drying up as the expenditure was reduced only by $300 million to ensure that government services continue.
He confirms that normal revenue like VAT, corporate tax, personal income tax, Environmental Climate Adaptation Levy, immigration fees and departure taxes have all been affected.
Sayed-Khaiyum says the government’s job is to try to boost the confidence and get businesses to get into construction activity. He says whilst demand for our goods and services offshore may remain muted, there are opportunities in the construction sector as the sector will create jobs from within.
The Minister for Economy has also raised the question on what the former Reserve Bank of Fiji Governor, Savenaca Narube means when he says that the government should inject $1 billion into the economy. He raises the question where the money will come from. Sayed-Khaiyum says the government has already stated that the plan is now to get more borrowings from offshore rather than onshore as Fiji also has to increase it’s foreign reserves which is down due to no tourism and reduced remittances. He confirms that foreign reserves stand at 6 months of import cover for now.
The Minister for Economy also says they have seen bank deposits of residents increase from $2 billion in 2006 to around $5 billion now. He says this shows there is a lot more wealth accumulation so when people have more savings, they can fight poverty.
Sayed-Khaiyum also says the fortnightly unemployment benefit will also assist people for now and they would like people to get back into employment as soon as opportunities arise.
The Minister for Economy says COVID-19 has had such a dramatic and immediate impact on the global economy that no government ever anticipated this.
He says even a country like Australia that has had 23 years of economic growth went into a shock, and had to go out and borrow large sums of money.
Sayed-Khaiyum says it is no minor feat for any of the economies of the world to be able to deal with this using the normal economic framework.
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