Chaudhry, Narube reject World Bank recommendations

Political leaders Savenaca Narube and Mahendra Chaudhry do not agree with the recommendations by the World Bank.

The World Bank report’s advice to cushion impacts of the crisis in Fiji include:

■ Removing zero-rated VAT on essential items and raising VAT up from nine to 15 per cent and reducing the income threshold from $30,000 to $16,000.

■ To offset this, there should be an increase in the contribution of the Poverty Benefit Scheme.

■ It also suggested reforms to be carried out on both government revenues and expenditures - civil servants’ pay review/cut is also listed.

Unity Fiji leader, and former Reserve Bank of Fiji Governor, Mr Narube, said he did not subscribe to this approach.

“First priority is to ensure our money is well spent. An expenditure review must be first undertaken. We must not spend money on wasteful expenditures.” “Increasing VAT penalises the poor while the rich are indifferent. Why would the Government do this at this phase of our economic recovery and during a cost of living crisis?

“Options that should be considered first are expenditure reforms. “Increasing welfare payments will not be adequate to offset the loss in income from lower wages and higher VAT.

“To counter the impact of policy on the poor, the government should increase welfare allowances.

“We must look at the entire fiscal and economic package rather than pick on the fiscal issues only.”

Fiji Labour Party leader, Mahendra Chaudhry, warned that World Bank’s recommendations to fix the Government’s balance sheet, if accepted, would bring untold hardship and suffering to at least 70 per cent Fijians.

“It will add thousands more to the poverty queue, fuel excessive inflation impacting negatively on the people and on businesses, lead to social disorder, chaos and instability,” Mr Chaudhry said.

“The report must be rejected and a more acceptable and realistic solution explored. The impact of the report’s recommendations on the nation as a whole, will be disastrous to say the least. It will further accelerate the exodus of skilled workers and professionals to foreign countries.”

He highlighted that increasing the VAT rate to 15 per cent and reinstating it on basic food items while reducing the tax threshold from $30,000 to $16,000 will hit our low and middle income families the hardest. “Women and children will bear the brunt of this inhumane recommendation,” Mr Chaudhry added. “Introduction of new taxes on our manufacturing industry would certainly discourage import substitution and fuel imports causing loss of existing jobs and adding to our balance of payments problems. “It is in this context that Labour is shocked that Finance Minister Biman Prasad should welcome the report.

“Judging from the timing of its release, we fear that its recommendations may be referred to the National Economic Summit for endorsement.”