More borrowings than expected but the government says it is necessary in response to COVID-19

A total of $3.536 billion has been allocated in the COVID-19 Response Budget.

The Ministry of Economy says the revised total expenditure takes into account the current spending trend, reprioritisation of capital expenditures, anticipated operational savings and new COVID-19 related allocations.

Based on projected total revenue of $2.507 billion, the net deficit stands at $1.028 billion for the COVID-19 Response Budget, equivalent to 9.0% of GDP. The deficit will be financed through both domestic and external borrowings from the Asian Development Bank and the World Bank.

By July this year, the government’s domestic debt is expected to total $4.992 billion while external debt is expected to total $1.996 billion. This will take the total debt to $6.988 billion.

The Minister for Economy Aiyaz Sayed-Khaiyum says, of course, they have to borrow more because of the new expenditures and the depletion in government revenue.

He says they could have very easily done a 10% salary cut for civil servants and statutory organisations and would have saved 120 million dollars or more instead of going out to borrow another 100 million dollars.

Sayed-Khaiyum says the fact of the matter is they need to keep the economy moving and they obviously have to re-finance.

COVID-19 RESPONSE BUDGET ESTIMATE 2019-2020
http://www.parliament.gov.fj/wp-content/uploads/2020/03/COVID-19-RESPONSE-BUDGET-ESTIMATE-2019-2020.pdf

ECONOMIC AND FISCAL UPDATE SUPPLEMENT TO THE COVID-19 RESPONSE BUDGET ADDRESS
http://www.parliament.gov.fj/wp-content/uploads/2020/03/SUPPLEMENT-TO-THE-COVID-19-RESPONSE-BUDGET-ADDRESS.pdf