Friday, December 8, 2023
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Fiji’s fiscal position was already under pressure: ADB

The Asian Development Bank has revealed that Fiji’s fiscal position was already under pressure, with the average deficit growing to around four per cent between the years 2016 to 2020.

This was highlighted in the Pacific Economic Monitor and indicated that this was due to weaker revenue collection and exacerbated by the onslaught of several tropical cyclones which strained Government resources.

The report also states that revenue performance weakened due to tax policy measures implemented in the years prior to the pandemic – the reduction of VAT from 15 per cent to nine, also the higher personal income tax-free threshold and an increased use of tax incentives schemes.

ADB also indicated that the previous Government’s tax reduction measures introduced in 2021, as part of the Government’s COVID-19 support package, resulted in the overall revenue loss, equivalent to five per cent to Fiji’s GDP.

The report said several tropical cyclones had pushed the Government to reallocate spending to provide immediate relief to affected citizens and earmarked capital resources for reconstruction costs.

The Pacific Economic Monitor also states that in 2016, TC Winston derailed plans for fiscal consolidation as the Government responded to damages and losses inflicted that were estimated at $2 billion.

However, the Government had mobilized several social protection interventions to respond to the immediate humanitarian needs of affected Fijians.

These came in the form of social welfare top-up payments, food voucher programs, housing programs and emergency access to pension funds amounting to $344.7 million.

ADB added that Government had to roll out a similar – though significantly larger response when the pandemic forced the closure of many businesses resulting in a loss of households’ livelihood and incomes.

Ilaitia Ravuwai
Ilaitia Ravuwai
Journalist |


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