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RBF Welcomes Reduced National Debt Level

Government’s commitment to bringing down the national debt level has been welcomed by the Reserve Bank of Fiji. The 2016 National Budget announced two weeks ago had estimated Government debt
16 Nov 2015 08:13
RBF Welcomes Reduced National Debt Level
Reserve Bank of Fiji Governor, Barry Whiteside.

Government’s commitment to bringing down the national debt level has been welcomed by the Reserve Bank of Fiji.

The 2016 National Budget announced two weeks ago had estimated Government debt level to be around 48.1 per cent of GDP next year, down from around 50 per cent this year.

Meanwhile, fiscal deficit for 2017 and 2018 is forecast at 2.5 per cent and 2 per cent of GDP, respectively.  As a result, debt is expected to reduce further to around 48 per cent of GDP in 2017 and 47.3 per cent of GDP in 2018.

Government has already won the vote of International Monetary Fund which has already indicated that our debt-to-GDP ratio is healthy.

Also that we are using debt prudently to build infrastructure that will generate income and build the economy.

Governor Barry Whiteside shared similar sentiments highlighting Fiji is on the right track.

He said the Government should always look at its debt and make sure that it is sustainable,” he said.

“If the Government keeps building debt, it then has less space to manoeuvre should something happen. That would be financial disaster or when you would like some space to move.

“That is why the Government needs to watch its debt levels. It is bringing it down from 50 to 48 and its medium term goals are to bring it down further. I think the Government is doing the right thing.”

Mr Whiteside said if the government did not do that, we would not have the space to move around and then it would be a worry.

“The organisations like the IMF would be coming down on us then. But if we compare Fiji’s debt to GDP level, we are much better from other countries,” he said.

 

The mix

It is no doubt that Government has increased its capital investments to provide returns not only to Government, but to all Fijians.

The capital to operating expenditure mix has significantly improved in recent years from a mere 14 per cent in 2007 to 40 per cent in the 2016 Budget.

The expenditure mix in 2016 has been maintained at 60 per cent operating and 40 per cent capital.

As Minister for Finance Aiyaz Sayed-Khaiyum emphasised, the higher the proportion of capital expenditure to total spending, the higher will be the quality of budget deficit.

Government revenues have risen from $1.4 billion in 2006 to a projected $2.6 billion in 2015 (apart from asset sales).

 

Overall budget

Overall, Mr Whiteside stated the 2016 National Budget was a good one.

He said there was a lot of emphasis put by Government in areas such as infrastructure, health and education.



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