Fiji records economic recovery while preparing for global uncertainties: Finance Minister

Fiji’s improving fiscal position signals a strong economic recovery despite growing global instability, says Minister for Finance, Commerce, and Business Development Esrom Immanuel.

The nation’s debt-to-GDP ratio fell from 91.8 per cent in 2022 to 78.9 per cent in 2025, while foreign reserves rose to $3.6 billion as of February 2026, enough to cover 5.2 months of imports.

Speaking in Parliament yesterday, Mr Immanuel said the rebound was driven largely by tourism and remittances.

Despite the positive outlook, Mr Immanuel warned that geopolitical tensions, particularly the Iran–United States proxy conflict, could disrupt global fuel prices and travel patterns.

“Fiji heavily depends on fuel imports,” he said, noting that a 10 per cent increase in fuel prices could cost the Government an additional $100 million in foreign reserves. However, he expressed confidence in Fiji’s resilience.

“We were the fastest economy to bounce back to pre-COVID levels,” he said.

The finance minister said higher fuel prices would also increase Fiji Airways’ operating costs, potentially affecting tourist arrivals if the USA–Iran conflict escalates.

“The war can affect travel and tourism activity for our country,” he cautioned, adding that reduced tourism would have broader implications for workers and foreign reserves.

He highlighted that Fiji imports $1 billion in fuel annually, and every 10 per cent increase in global oil prices would require an additional $100 million from foreign reserves.

Mr Immanuel said Fiji had already shown strong resilience during the COVID-19 pandemic and remains capable of weathering new economic shocks.

Geopolitical tensions

Mr Immanuel said that amid current global tensions, including the USA–Iran war, the Government continues to closely monitor trade disruptions, fuel price volatility, and other uncertainties impacting a small island economy.

He said unpredictable global conditions have affected growth and investor confidence.

“Our isolated location from major trade routes continues to challenge us,” he said. “The evolving global landscape further amplifies these existing challenges.”

He said the Government must ensure financial policies strengthen resilience, promote inclusive growth, and safeguard Fiji’s economic future.

“While we prepare for the best, we must also prepare for the worst,” he said. “We will plan for downside economic growth, strengthen our domestic market, and protect vulnerable households.”

Crude oil prices have risen to $90 per barrel compared with $60 per barrel last year, and Mr Immanuel warned they could reach triple digits if tensions escalate.

Growth rates

Mr Immanuel said Fiji recorded a broad economic growth rate of 3.4 per cent in 2025, with tourism remaining a key pillar of stability. However, he said this growth is likely to be affected by global uncertainties.

Visitor arrivals totalled 186,000 last year, surpassing pandemic levels. Inward remittances reached $1.4 billion in 2025, providing essential support to households.

Investment momentum improved last year, though Mr Immanuel said the Government must streamline processes to improve the ease of doing business. He added that private sector growth remains crucial for economic expansion.

“Interest rates remain low at 4.5 per cent, reflecting the accommodative stance of the Reserve Bank of Fiji.”

The trade deficit widened in 2025 to a projected 9.8 per cent of GDP due to high imports and modest export growth. Fiscal debt declined from 91.8 per cent in 2022 to 78.9 per cent in 2025.

Tax collection exceeded expectations, reaching $1.6 billion in the first six months of the 2025/2026 fiscal year.

“This shows greater tax compliance,” he said.

MP Chand rebuts

Member of Parliament Hem Chand said the increase in value-added tax (VAT) had negatively affected many low- and middle-income families. He said the rise to 15 per cent created unexpected hardship for households struggling to afford basic needs.

“Cost of living continues to hurt our families. Their suffering is real and faced daily,” he said.

He added that the later reduction of VAT to 12.5 per cent came too late for many families who had already fallen into deeper financial difficulty.

Mr Chand also said there is speculation that with the upcoming General Election, the Government may adjust VAT again for political convenience.

“People of Fiji need stable policies, not trial-and-error taxation that punishes people first and corrects it later.”

Mr Immanuel confirmed that preparations for the 2026/2027 National Budget are underway, with nationwide consultations beginning later this year.