Proposals to Reduce Debt Burden

The performance of State-owned enterprises should be monitored, a comprehensive report on Fiji’s debt dynamics has recommended.

The recommendation comes in light of the significance of contingent liabilities to overall debt sustainability.

Titled Debt Dynamics in Fiji: Impacts, Challenges and Strategies for Sustainable Economic Development, the report called for enhanced communication about regular risk assessments, as part of the government’s public debt reporting.

To ensure lowest possible cost of borrowing, the report recommended:

• prioritising concessional finance for economic develop-ment, climate adaptation and mitigation needs, as external borrowing on non-concessional and commercial terms brought with it risks.
•  reviewing each loan to ascertain the benefits accrued and identify better terms, given that $1billion of the $3.66 billion national debt was con-cessional.
•  domestically it could rigorously include differentiating how debt financing is used, and prioritising borrowing for productive investments that can create durable economic growth and thereby more fiscal space.
• commitments from official development partners for a standby or sinking fund that could be activated and uti-lised by Fiji under certain conditions or risk events.

Remittances remained critical to the economy, the report said.

“However, remittances needed to be better utilised for productive purposes, with a balancing act on the impact of lost labour productivity from out migration,” the report said.

“Reducing remittance cost re-mains a priority issue.”

Other broader recommendations contained in the report included:

• An automated suspension on debt servicing, repayments, interest and charges, upon the national declaration of a crisis or emergency.
•  Scaling back debt obligations depending on Fiji’s ability to pay, as State contingent debt instruments are being explored.
•  Diversification of light manufacturing to niche high-value, non-commoditised products, such as premiumquality sports and fashion apparel, and skincare prod-ucts catering to the high-end segment of the market, which makes premium pricing possible.
•  Further research and study into diversification of manu-facturing subsectors, to identify where the new growth opportunities are.
• Agricultural productivity must be stepped up to drive growth. Higher productivity will have to come from mod-ernisation, diversification, and commercialisation of the sector.
• Expansion of production of other primary sector outputs for high margin niche markets, especially where Fiji has a competitive advantage.
•  Continuous skilling and re-skilling of the workforce to meet the needs of new industries that emerge in the course of restructuring.

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