Tax collections remain resilient
WITH tourism recovery right on track, Westpac Fiji estimates tax revenues for financial year 2021-2022 to be higher than anticipated in the July 2021 budget.
According to the Westpac Wave, tax collections have been resilient in the second half of the year relative to the downturn experienced during the lockdown period over the first four months of FY2021-2022.
It also highlighted that in October this year total government spending was slightly lower than budgeted because of tighter controls on operational expenditure and the underutilisation of other budgetary allocations due to circumstances that prevailed during the financial year.
The report continued to share that provisionally, total government revenue for FY2021-2022 stood at $2.2 billion, while total government expenditure stood at $3.3b, adding that both government revenue and expenditure were higher than in FY20202021.
Meanwhile government net deficit for the last fiscal year stood at $1.2b, which is equivalent to a provisional 12.0 per cent of GDP, 16.2 per cent lower than originally anticipated and also lower than the recently estimated 13.8 per cent of GDP.
Westpac Fiji’s senior economist Krishal Prasad said government debt was estimated to be around $9.1b or 89.4 per cent of GDP at the end of July 2022.
In the report he shared that for FY2022-2023, public debt was projected to increase to $9.9b, equivalent to 85.2 per cent of GDP.
According to Mr Prasad’s analysis to move towards fiscal consolidation, the Government’s first Medium-Term Debt Management Strategy (MTDS) is now in place, which articulates the Government’s debt objectives and outlines the framework for formulating and implementing a prudent borrowing program.
He said the medium-term fiscal strategy will complement this to ensure debt sustainability and fiscal discipline. Mr Prasad said the Medium-Term Fiscal Framework provided the broad revenue, expenditure, deficit and debt targets for the medium term.
He added that it was geared towards reducing the fiscal deficit to below 3.5 per cent of GDP from FY2023-2024 and bringing down government debt to below 70 per cent of GDP in the next seven years.