Budget needs growth strategy beyond fiscal discipline: Reddy

Former Cabinet minister and economist Dr Mahendra Reddy says the Coalition Government's 2026-2027 National Budget takes the right approach to restoring fiscal discipline but falls short of presenting a credible strategy to transform Fiji's economy and deliver long-term prosperity.

In a commentary following last Friday's Budget announcement, Mr Reddy said the Government had correctly identified the need to restore stability to the country's public finances after years of rising debt and increasing fiscal pressures.

"The Minister (Finance Minister, Esrom Immanuel) has correctly recognised that Fiji's public finances have deteriorated significantly over the past decade and that restoring fiscal discipline is now essential."

He said expenditure restraint was necessary given Fiji's debt position, but warned that balancing the books alone would not secure the country's economic future.

"Fiscal consolidation may restore stability. Only economic transformation will deliver lasting prosperity."

Mr Reddy said the Budget placed considerable emphasis on managing Government expenditure but provided comparatively little detail on how Fiji would increase productivity, attract investment, diversify exports and generate stronger long-term economic growth.

He acknowledged a number of positive Budget measures, including incentives for domestic manufacturing, value-added timber processing, workforce development and infrastructure investment.

"These are sensible initiatives and deserve recognition. However, they remain largely sector-specific interventions rather than components of an integrated national growth strategy."

Mr Reddy said the Budget did not clearly explain how Fiji intended to lift its long-term economic growth beyond current levels.

“The Government has failed to grasp the notion that fiscal consolidation creates stability in the short run but economic transformation will contribute to prosperity in the longer run.” 

He argued governments achieve fiscal sustainability not simply by reducing expenditure but by expanding the economy and creating greater national wealth.

"Governments do not become fiscally sustainable simply because they reduce expenditure. They become fiscally sustainable because their economies become larger, more productive and more competitive."

According to Mr Reddy, stronger economic growth naturally increases Government revenue, improves debt sustainability and creates greater capacity to invest in health, education, infrastructure and social protection.

He said future Budget discussions should shift from focusing primarily on taxation and fiscal management to policies that expand national income through higher productivity, investment and exports.

Mr Reddy also called for the launch of a National Productivity Movement involving Government, businesses, educational institutions, state-owned enterprises and civil society to improve efficiency and competitiveness across the economy.

"The Hon Finance Minister should have announced the launch of a National Productivity Movement... Unfortunately, the Budget address provided no real strategy for productivity growth in the country."

While supporting the Government's efforts to restore fiscal discipline, Mr Reddy said the next challenge was to move beyond fiscal management towards long-term economic transformation.

"The challenge now is to move beyond fiscal management towards economic transformation."

He said future Budgets should be more closely aligned with the National Development Plan and include measurable strategies to build a stronger, more productive and more resilient economy.