The International Monetary Fund has indicated that Fiji is experiencing a strong economic growth after the pandemic.
However the country’s debt which is 85 per cent of the Gross Domestic Product, makes it vulnerable to macroeconomics, climate and other shocks.
IMF Team Leader Marshall Mills says that macroeconomic policies should aim to maintain strong growth while addressing the high public debt and gradually unwinding the accommodative monetary policies.
Mills said the Government’s efforts to reduce debt levels should focus on front-loaded revenue measures including VAT reform, supported by income support to the most vulnerable and growth-enhancing structural reforms.
“Fiji high debt deprives it of the fiscal space to respond to shocks. The country remains vulnerable to weaker growth in advanced economies that would reduce tourist inflows and remittance.”
He also highlighted that Fiji is currently experiencing a strong economic recovery from the pandemic.
Mills says real GDP growth rebounded by an estimated 16 per cent in 2022 driven by the strong revival in tourist flows, while at the same time, supported by the strong economic recovery, fiscal deficits are falling from 12.2 per cent of GDP in 2022 to a projected 7.7 per cent for 2023.
“With the stabilization in global commodity prices, inflation has eased recently, declining to 1.5 per cent last month. With high global commodity prices and the still partial recovery in tourism, the current account deficit remained elevated at an estimated 14 per cent of GDP in 2022.”
“However, foreign exchange reserves remained relatively comfortable at 6.2 months of prospective imports, cushioned by concessional financing from donors and remittance,” Mills added.