It's ironical that Aiyaz wants to lecture us about Govt debt and financial prudence – Prof.Prasad
Debt under Rabuka Govt is now going to be above $10 billion - Sayed-Khaiyum

It's ironical that Aiyaz wants to lecture us about Govt debt and financial prudence – Prof.Prasad

Debt under Rabuka Govt is now going to be above $10 billion - Sayed-Khaiyum

By Vijay Narayan
Thursday 06/07/2023
Deputy Prime Minister and Minister for Finance, Professor Biman Prasad & former Minister for Economy, Aiyaz Sayed-Khaiyum

Deputy Prime Minister and Minister for Finance, Professor Biman Prasad says it's ironical that the FijiFirst Party which increased Fiji's debt by over $7 billion since 2007 is wanting to lecture the new Government about financial prudence, fiscal discipline and debt management after former Minister for Economy, Aiyaz Sayed-Khaiyum said that debt, which was supposedly a very bad thing for the country, is now going to be above $10 billion under the Rabuka led government.

While responding to Sayed-Khaiyum’s facebook post, Professor Prasad says it's under the FijiFirst and Sayed-Khaiyum that Fiji's debt increased from $2.7 billion in 2007 to almost $10 billion.

Professor Prasad says the man who now wants to be the "defacto Leader of Opposition" is the same person that was responsible for the $6 billion addition to our national debt under his leadership as Finance Minister from 2014.

He says the $6 billion increase out of the $7 billion increase was directly piled up by Aiyaz, and he should be the last person to lecture us about debt management.

Professor Prasad says in the 2023/2024 budget, they have halved the fiscal deficit from an average of 9 percent in the last few years to 4.8 percent.

He says they have put the debt to GDP ratio on a sustainable path from the peak of 90 percent under FijiFirst to now below 80 percent. Professor Prasad says they have been responsible and taken the hard decision to fix the revenue problem by permanently adding $600 million additional revenue to Government coffers, and also made sure that the vulnerable are protected and the economic recovery is not disrupted.

He says this has in fact built credibility amongst the people, businesses and development partners about the coalition government's commitment to fiscal prudence.

The Deputy Prime Minister says on expenditure, Aiyaz Sayed-Khaiyum has quickly forgotten that his 2017/2018 had planned expenditure of almost $4.4 billion and again in his 2018/2019 budget he had allocated a total expenditure of almost $4.7 billion, and he did that with a revenue hole of over $1 billion.

Professor Prasad points out that Aiyaz promised a large budget before the 2018 elections and delivered $1 billion less because there was no money.

He says Aiyaz went that far to mislead the people.

Professor Prasad says the 2023/2024 budget of $4.3 billion is still lower than those two budgets but more importantly, they are basing the expenditure on a sound revenue forecast and financing plan and not like the fake budgets that were made in the past by Aiyaz.

He says they have received an overwhelming support for the budget given its prudence and inclusiveness.

The Deputy Prime Minister says they have a plan to fix the debt situation and our economy and they will not be distracted by people like Aiyaz Sayed-Khaiyum who were solely responsible for creating the mess that the coalition government is trying to fix.

He also says Aiyaz Sayed-Khaiyum has also presented a convoluted analysis of the tax exemption to the water sector to mislead everyone and try to portray that Fiji has lost government revenue.

Professor Prasad says while Aiyaz talked about the corporate tax exemption, he selectively ignored that water resource tax has been increased from 18 cents per litre to 19.5 cents per litre.

He says overall, there is a revenue gain for Fiji through this arrangement and at the same time it also allows our major investors to claim tax credits overseas which will help us with more reinvestment in Fiji.

The Deputy Prime Minister says basically, under this new arrangement, all bottled water companies will have a corporate tax holiday and they will only pay the water resource tax.

He says for those extracting less than 10 million litres per month, the rate will be unchanged, however for those extracting more than 10 million litres, the rate has been increased from 18 cents to 19 cents with an overall gain in revenue for Fiji.

Sayed-Khaiyum had posted that after promising to exercise "fiscal prudence", "fiscal conservatism" or "fiscal consolidation", supposedly because of mismanagement by the FijiFirst, the Rabuka sanctioned budget delivered by Biman has handed down the largest spending budget in Fijian history, outside of the pandemic years.

He said the budget does not provide any concrete or real plans to grow the economy on a sustained basis.

Sayed-Khaiyum says with already such a large deficit weighted fundamentally on operational expenditure, we can see that such deficits will be there for the long-term, meaning more and more debt.

He says there is nothing about fiscal prudence in this budget, and polar opposite to what was promised prior to the budget announcement.

Sayed-Khaiyum says the VAT hike and meddling with departure tax will make tourism industry less competitive.

He asks how is the budget fair and just or balanced as they like to call it - especially when you ask the low income and middle class to pay or do all of the heavy lifting of government’s extravagance while high income earners get off scot-free.

Sayed-Khaiyum says operating expenditure is way up in this budget, and operating expenditure does not build assets.

He says every company that is currently paying the corporate tax rate of 20% will now have to pay 25%, except all water extraction and bottling companies.

Sayed-Khaiyum says here we have Fijian owned businesses, small and medium enterprises, struggling in this already dampened market because of the uncertainty of economic policies over the past few months, the massive skills and brain drain, lack of general consumer confidence, impending increased FNPF contributions, increased negative impact on cash flow because of VAT increase and general cost of doing business, and, pressure from employees to raise wages because of increased day to day costs for them, now having to pay 5% more corporate taxes (an increase of 25%) when Fiji Water and other water extraction and bottling companies will now not pay any corporate tax for the next 7 years.

He says the justification that by increasing water resource tax we will overall be collecting more on balance also does not hold water.

Sayed-Khaiyum says they can pay corporate tax and water resource tax.

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