NEWS

Budget Strongly Focuses On Rehab, Reconstruction

Fijians who lost their homes and had their schools affected by Tropical Cyclone Winston, now have a reason to smile. Government has put strong focus in the 2016-2017 Budget in
23 Jun 2016 14:10
Budget Strongly Focuses On Rehab, Reconstruction
Attorney General and Minister for Finance Aiyaz Sayed-Khaiyum following the 20162017 National Budget at Parliament House yesterday. Photo: RONALD KUMAR.

Fijians who lost their homes and had their schools affected by Tropical Cyclone Winston, now have a reason to smile.

Government has put strong focus in the 2016-2017 Budget in meeting considerable costs relating to rehabilitation and reconstruction works post Tropical Cyclone Winston.

This takes into account public infrastructure including schools, health facilities and individual housing.

The post disaster needs assessment compiled by the World Bank had put a total damage of $2.8 billion where 250 schools were damaged and more than 30,000 homes destroyed.

$207.9m has been provided in total for rehabilitation and reconstruction works of which $142.6m has been allocated to rebuild and repair all education facilities immediately.

$20m has been allocated to continue with the Help for Home initiative to continue building the lives of those who lost their homes because of TC Winston.

In making this announcement last night, the Minister for Finance, Aiyaz Sayed-Khaiyum, admitted it may take a few years in some parts of the country to bring it back economic activity to where it was before Winston.

“Government may have to spend $750 million directly to fully restore the Fijian economy. That is in addition to expenditure by the private sector, individuals and aid partners,” he said.

“We will repair damage schools, relocate families from hazard-prone areas and develop disaster resilient settlements.

“Under the recovery plans for school, Government is keen repair the schools very quickly so children can return to classes and regain sense of normalcy, security and predictability.”

Mr Sayed-Khaiyum said Government was accepting requests for lead consultancy proposals from consulting firms to begin a design phase for construction works.

“Construction contracts and health facilities will be progressively awarded and commence in the next few weeks,” he said.

But this does not mean Government has removed its focus from the other essential areas which have been the major focus over the past few years.

It continues funding in the areas of infrastructure development, improving health and education services, strengthening natural resource management and supporting and protecting the vulnerable groups.

 

The actual budget

A budget with an estimated revenue of $3.1bn and expenditure of $3.6bn was announced last night by the Minister for Finance, Aiyaz Sayed-Khaiyum, for the financial year 2016-2017.

The net deficit is budgeted at $468m or 4.7 per cent of GDP.

In comparison, the net deficit as percentage of GDP for the 2015-2016 financial year (revised and aligned to new financial year) is budgeted at 1.6 per cent or $146m.

Of the total expenditure for this financial year, over $200m or slightly above two per cent of GDP, is related to Tropical Cyclone Winston rehabilitation and reconstruction.

The Budget has therefore been cast to address the immediate needs facing the country at this point in time, while adhering to basic fundamentals of prudent macro-economic management.

The 2016-2017 Budget needs to be viewed in the context of the overall multi-year reconstruction and recovery plan of Government.

The systematic programming of rehabilitation expenditure through the budgetary process is expected to smoothen out expenditure in the latter years.

More importantly, Government believes this refocusing of expenditure is anticipated to have a positive impact on medium to long term macro-economic fundamentals of the country.

It said the increased expenditure outlay will stimulate economic activity across a number of sectors and in turn, support employment creation, raise consumption levels and provide further impetus for growth.

 

The deficit forecast

The Budget deficits for the financial year 2017-2018 and 2018-2019 are projected at 3.5 per cent and three per cent of GDP respectively.

The corresponding debt levels are estimated at around 51.3 per cent of GDP and 51.8 per cent of GDP.

Government said the benefit of this stimulus will be realised in the medium term as the growth generated will provide the fiscal space needed to consolidate Government’s fiscal position over the long term.

Both net deficit and debt as percentage of GDP are expected to be in line with Government’s broad medium-term fiscal framework.

Feedback:  rachnal@fijisun.com.fj

 

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