Fiji Doing Well in Managing Debt Levels Compared to More Developed Nations

Every second politician in Fiji has become an overnight expert on debt after the 20202021 national budget addressed which was delivered last Friday. It does not help when unchallenged commentary is given platform by those with obvious political agenda. Want to know about debt to GDP? (Refer to Graph 1).

This list is from International Monetary Fund data from the April 2018. A more recent list will show other countries climbing the debt leader in light of COVID-19.

All the countries and others listed in Graph 2 have had a major spike in debt after the coronavirus pandemic. Fiji has done very well in managing its debts, borrowing to build, focussing on infrastructure. But the coronavirus pandemic has no doubt been a situation no world leader had anticipated.

Despite being considered a developing nation, Fiji has done far better than most countries in containing this pandemic.

Additionally, for a country which was heavily reliant on tourism, it is a no brainer that our economy would suffer when almost every country in the world shut off their borders.

But, instead of sitting and twiddling its thumbs, Government has done what is needed to keep our economy running. Fiji’s debt to GDP after more than a decade will be 83.4 per cent.

FijiFirst position on debt: Attorney-General and Minister for Economy Aiyaz Sayed-Khaiyum had this to say in his national budget address: “Like any sensible nation or business on Earth –– we will be borrowing to make up the remaining difference in revenue.

“Mr Speaker, some weeks back we announced COVID-19 Concessional Finance Support Packages to aid Fijian-owned Micro, Small and Medium Enterprises worst affected by the pandemic. These are highlytargeted loans that ease the financial burden on enterprises until our economy makes its recovery.

These businesses –– borrowing at extremely concessionary terms –– can immediately put funds to work readying their businesses for the day their revenues return.

“When a government borrows –– responsibly –– it is no different. It’s an investment in our future.

“And when we can get loans at very concessional terms, we would be foolish not to seize the opportunity. This isn’t some debt trap; it’s the international financial system’s vote of confidence in the Fijian people and in our potential as a nation. “Over the years, the word “borrowing” has an all too predictable response from those who know alltoo-little about modern economics, distorting the facts to politicise proven economic analyses.

“Rather than frame smart borrowing as an investment in our future, they claim it’s a burden on our children.

“But when we borrow prudently we allow our children to be educated, our communities to be connected to electricity, roads and jetties, and our economy to grow. “Borrowing now to build for tomorrow means future generations can borrow less.

“And a growing economy with a skilled and educated workforce generates more than enough national wealth and tax revenue to repay debt and invest in the future.

“The “borrowing is always bad” narrative is not only wrong, it is entirely out-of-touch with how responsible governments have used debt to grow GDP –– without exacerbating inflation.

“And in times when misinformation and disinformation can literally cost lives, such ignorant analysis is especially dangerous.

“Could Fiji have “saved for a rainy day” over the past decade? Yes, and we did.

“But the global COVID-19 pandemic isn’t some casual “rainy day” over Suva –– it is a cyclone of unprecedented proportions. Saving the sums necessary to combat this crisis would have meant withholding free education.

“Leaving thousands of Fijians without clean water and electricity. Increasing taxes, like VAT.

“Forfeiting free healthcare, and never aiding those who lost everything to Cyclone Winston.

“The Fiji of today would look like the Fiji of post-1987.

“The businesses and industries and young, bright Fijians that we have seen blossom simply wouldn’t exist; those Fijian success stories would never have been written, robbing hundreds of thousands of our people of their true potential.”