Finance minister defends deficit level

Fiji's Finance Minister Esrom Immanuel has defended the nation's projected fiscal deficit of around 7% of GDP, framing it as a responsible measure amidst extraordinary global and domestic economic challenges. The National Budget outlines $4.8 billion in government spending, a $1 billion deficit, and anticipates public debt reaching approximately 84.8% of GDP.

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Responsibility is not determined simply by numbers that the real measure lies in the policy choices government makes when faced with extraordinary circumstances.

Immanuel explained that the budget was prepared in a "highly volatile and uncertain" global environment, citing fuel price shocks and international instability as key factors influencing revenue and spending. He asserted that the deficit is not a sign of mismanagement but a necessary response to crises including fuel price volatility, election costs, census funding, and significant capital investments for long-term development.

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Some people have questioned whether a 7 per cent deficit can be considered responsible. However, he said reducing it further would have required deep cuts to essential services or tax increases that would have placed additional pressure on households and businesses.

The minister argued that true responsibility lies in policy choices during extraordinary circumstances. He stated that reducing the deficit further would have necessitated deep cuts to essential services or tax increases, burdening households and businesses. Immanuel highlighted that the government deliberately avoided raising VAT, income tax, or corporate tax, and refrained from increasing taxes on basic food items or imposing additional burdens on low-income households.

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government deliberately chose not to increase VAT, income tax, or corporate tax, and also avoided imposing additional burden on basic food items and low-income households during a period of rising living costs.

Instead, the budget prioritizes essential services and maintains investment in major infrastructure projects, such as health facilities, roads, water systems, and energy upgrades, aimed at strengthening long-term economic capacity. The Finance Minister also noted that government has implemented spending containment measures, including reductions in operational expenses like travel and administrative costs across ministries. He described the fiscal framework as a "worst-case scenario" approach to ensure economic stability, with potential for improvement if revenue and tourism performance exceed expectations. Immanuel concluded that the budget balances immediate social protection with long-term development, representing a "responsible path" toward fiscal sustainability.

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The fiscal framework reflects a “worst-case scenario” approach, designed to ensure the economy remains stable even if global conditions worsen, while leaving room for improvement if revenue and tourism performance exceed expectations.