Government debt was projected to reach $9.8 billion or 81. 2 per cent of Gross Domestic Product at the end of the last financial year, slightly lower than the earlier projection of the $10 billion mark.
This comprises $6.2 billion in domestic debt and $3.7 billion in external debt.
Minister for Finance, Professor Biman Prasad said the impact of the dual shocks of the COVID-19 pandemic and a series of natural disasters that struck Fiji from 2019 to 2021 resulted in the large increase in borrowings towards emergency support, recovery measures and rehabilitation.
External financing increased significantly during this time, however, terms and conditions of the new borrowings are concessionary.
The Deputy Prime Minister said the domestic debt was to reach $6.2 billion or 51.1 per cent of GDP, by the end of July.
Prof Prasad said this comprised of $5.9 billion in domestic bonds and $297.2 million in treasury bills from FY 2018-2019 to FY 2022-2023.
He said domestic debt market remains the main source of Government debt financing – During the FY 2022-2023, domestic debt instruments issued consisted of ‘Fiji Infrastructure Bonds’ and Viti Bonds.
“Viti bonds are retail bonds which are in high demand as evidenced by the full utilisation of the approved limit. On the other hand, T-Bills are also an important tool for Government in developing the domestic market through regular issuances to develop the yield curve and to provide temporary financing.”
“To develop a well-functioning domestic market for debt securities, the Government issued short term bonds with gradual reductions in T-Bills during the year.”
He highlighted at the end of May 2023, liquidity levels remained high at $2.3 billion and is projected to remain at adequate levels in 2023.
Prof Prasad said this has pushed yields for Government debt instrument to historic low, resulting in slow intake for long-term Government securities.
He added market yields for long-term bonds have significantly dropped when compared to four-years ago.
External debt stock is projected to increase to $3.7 billion at the end of July, equivalent to 30.1 per cent of GDP.