We have the largest cabinet in Fiji's history, and more than $11 billion government debt, all of which is happening when the taxpayers of the country are being asked to tighten their belts.
That is the comment of Dialogue Fiji's Executive Director, Nilesh Lal during the State of the Fijian Economy Dialogue, as he says urgent action is needed as we have a deterioration in a number of fronts in the current financial year as government debt is forecast to go up to $11.3 billion by next month which is an increase by $2 billion in 3 years in a non-crisis year.
Lal says public debt continues to increase, the deficit in the budget has increased, there is nothing much to show for the increased borrowing, and capital expenditure is seriously declining.
He says a lot of burden has been placed on the taxpayer by increasing the VAT, and he asks whether it has translated into fiscal consolidation.
Lal says while government revenue has increased by $1.19 billion from the 2022/2023 financial year, government debt has increased by $1.95 billion.
The Dialogue Fiji Executive Director asks why did the debt grow during a supposed recovery period.
He says the expenditure mix is significantly deteriorated as most of it is operational expenditure and capital expenditure has dwindled to 19 percent.
Lal says capital expenditure was 38 percent in the 2015/2016 financial year.
He adds the nation cannot afford to pay $11 billion debt and growing, to just fund civil service operating expenditure.
He also sounded warning bells about the declining operating surplus in the budget in case we have major shocks like a category 5 cyclone or a pandemic.
Lal says the operating surplus was $598 million in the 2024/2025 financial year however it is just $28 million in the 2025/2026 financial year - a decline of $570 million.
It has also been highlighted that most of the borrowing is from domestic sources, and the government has funding gaps and is unable to source funds from overseas funders.
With many skilled people leaving Fiji, Lal says we have surging nominal debt and a shrinking taxpayer base.
The government has to make some tough and strategic decisions to deal with these issues.
The 2026/2027 National Budget will be delivered on June 26th.
