1. Maintaining fiscal stability and supporting economic growth is a delicate balance. What are your government’s key fiscal priorities for ensuring sustainable and inclusive growth in Fiji?
Fiji has demonstrated considerable resilience over the last few years, particularly following COVID-19. We are now also operating in a period of global uncertainty, with the war in Ukraine and the conflict in Iran affecting the global economy and, consequently, Fiji.
Going forward, fiscal consolidation is a key initiative for us. Our priority is to ensure that our fiscal position remains sustainable while putting sound financial policies in place to support continued economic growth.
Over the last three years or so, Fiji has grown by around 20% from 2021, driven by the recovery in tourism, private sector consumption and investment. As the recovery from the pandemic reduces, our focus is moving from recovery towards strengthening the foundations of our economy and ensuring sustainable economic growth.
Fiscal priorities are particularly important because, during the pandemic, public expenditure increased significantly, from around FJ$3.6 billion to approximately FJ$4.87 billion in our new budget. A large proportion of that is operating expenditure, reflecting the circumstances we faced during COVID-19.
Going forward, we want to improve not only the level of expenditure but also the quality and efficiency of public expenditure. We want to see the fiscal deficit reduce over time and ensure that public debt moves onto a sustainable downward trajectory.
That trajectory was progressing well over the last three years until this year, when we experienced the fuel crisis. From March onwards, the government had to realign its expenditure to ensure that the economy continued to function and that our people, particularly vulnerable communities, continued to be supported.
The effects of the fuel crisis have now subdued somewhat, and we are prioritizing strategic infrastructure in our new budget. This includes transport networks, renewable energy, water and wastewater systems, digital connectivity, healthcare and education.
One important project is the redevelopment of the Suva port, which will enhance Fiji’s role as a regional transport and logistics hub, particularly for the Pacific Islands and our neighbours Australia and New Zealand. This will improve trade efficiency and unlock new private investment opportunities across the Pacific.
With our fiscal stability objectives, we also recognize that future development must increasingly be driven by the private sector. Government cannot do everything. Our debt-to-GDP ratio is expected to rise to around 84%, almost 85%, and fiscal space is limited.
We therefore want to attract more private sector investment, innovation and entrepreneurship. Government’s role is to provide macroeconomic stability, infrastructure, a competitive tax system and a predictable regulatory environment, an environment that gives businesses the confidence to invest and create jobs.
We also want to ensure that Fiji is resilient to climate risks. This is not only an environmental priority; it is also an economic and fiscal imperative. Fiji and other Pacific countries are particularly vulnerable to natural disasters and climate change.
We will therefore continue integrating climate resilience into our public investment programmes while working with multilateral and development partners to secure concessional funding. This will help us finance infrastructure while ensuring that Fiji is better prepared for disasters.
Ultimately, we want to achieve a stronger, more inclusive economy in which the private sector continues to lead growth, while maintaining sufficient fiscal buffers. Government will step in particularly when there is a need for major strategic infrastructure.
2. Infrastructure, as you mentioned, is fundamental to Fiji’s competitiveness. How is the government financing strategic investments in transport, energy, water and digital connectivity to support long-term economic development?
Infrastructure is extremely important, and there are different aspects to it.
Roads are fundamental. We need not only an adequate road network but quality roads that work for businesses, the private sector and our people.
Water and wastewater are also priorities. Some of our infrastructure is quite old, and while we have renewed some facilities, we will continue rebuilding and upgrading them to a capacity that can cater to the growth that is coming.
In the next financial year, we have already budgeted for projects involving water, wastewater and bridges.
Digitalization is also key. We are fortunate to have well-known providers operating in Fiji, including Google, Vodafone and Digicel, which is now owned by Telstra Australia. They are assisting us with communications infrastructure. The government’s role is to ensure that our digital and communications strategies are rolled out effectively to our people.
Energy is another critical issue. The fuel crisis made us very aware of our vulnerability. Following the war, the impact on fuel supply and prices was felt in Fiji relatively quickly. We had to look to our source markets, including Singapore, Malaysia and Korea, particularly for fuel supplies.
We managed to secure the supply, but the price remains a concern. Fortunately, Fiji has a monthly price mechanism that has helped contain the impact of price increases.
The experience has encouraged us to think beyond fuel supply. We need to become more resilient in terms of energy.
Energy Fiji Limited, in which the government is a major shareholder, has a renewable energy strategy involving around $2 billion worth of renewable energy projects over the next 10 years. The target is to reach approximately 50% renewable energy by 2030 and around 90% by 2035.
Energy Fiji Limited will undertake much of the financing, while the government is assisting with financing options through our multilateral partners. This will help make Fiji more resilient as energy demand grows alongside the economy, businesses and the population.
Ports are another major component of our infrastructure strategy. As you are aware, we have been discussing this with the U.S. government through the Millennium Challenge Corporation, or MCC. The MCC is interested in supporting key infrastructure projects in Fiji, including our ports.
We have already signed an agreement involving US$12 million for the initial preparatory work, and further discussions are expected towards the end of this month.
The port project has a five-year timeline, with the U.S. government providing grant funding. This is a significant vote of confidence in Fiji. The U.S. Deputy Secretary of State also came to Fiji, where we signed the initial agreement for funding and assistance towards the project.
Our objective is to position Fiji as a hub of the Pacific. We are looking at developing the port in Suva, upgrading the port in Lautoka and exploring shipbuilding opportunities in Lautoka as well.
We also have Airports Fiji Limited, another important Fijian institution responsible for our airports. It has around $2 billion worth of capital expenditure projects that it will undertake, and the Ministry of Finance is assisting with these capital projects through multilateral partners.
It is crucial that we continue investing in infrastructure to support the investments that are already taking place and those that we want to attract in the future.
3. Fiji is internationally recognized for its leadership in climate action. How is the government leveraging climate finance and innovative funding mechanisms to strengthen the economy while advancing sustainable development?
Fiji has participated actively in COP meetings and international climate initiatives, and we are benefiting from those relationships. Our Ministry of Environment and Climate Change is benefiting from these arrangements, including additional funding that has recently been provided to assist Fiji.
We also have our multilateral partners, including the Asian Development Bank and the World Bank, assisting us with policy reforms. Some of those reforms are directly linked to climate initiatives.
This year, Fiji will also host the pre-COP meeting in Nadi with the assistance of Australia. This is another indication of how seriously we take climate change and environmental issues.
For Fiji, climate resilience is closely connected to economic resilience. As a vulnerable Pacific island country, we need to ensure that our infrastructure and public investments can withstand the natural disasters and climate-related risks that we face.
4. Government debt and fiscal sustainability are important considerations for many economies. How do you intend to balance responsible fiscal management with the need to invest in Fiji’s future?
When we came into government, Fiji’s debt-to-GDP ratio was over 90%, which was quite high.
The previous government had been in power for more than 16 years. When we came in, we assessed the situation and decided to continue with a number of infrastructure projects that had already been started. Some were good projects, while others required additional assistance, and we worked to complete many of them.
We also faced skills constraints, so it took us approximately six months to a year to fully assess what needed to be done.
We saw the high debt-to-GDP ratio in the context of the COVID-19 crisis. People needed to be supported, as did businesses and the wider economy. That is why, from the 2022 to 2026 budgets, we made significant expenditures to support both people and the economy.
This year, because of the fuel crisis, we have had to consolidate our position and ensure that fiscal space remains available.
We have therefore put in place a fiscal strategy to contain debt levels and target expenditure towards areas that will support economic activity. The objective is to build a foundation for future growth while maintaining fiscal sustainability.
Hopefully, the situation surrounding the conflict in Iran will be resolved, which would also assist Fiji because global instability has a direct impact on the support we can provide to businesses and people.
5. Looking ahead, what are your main fiscal priorities over the next five years, and what is your long-term vision for building a more resilient, competitive and prosperous Fijian economy?
Our long-term strategy is to ensure sustainable, inclusive and resilient growth for the Fijian economy.
One of our main targets under our 2050 vision is to move towards becoming a high-growth economy, with a target of achieving more than 5% growth.
We want to see a diversified and resilient economy. Currently, Fiji is heavily reliant on tourism. As part of our diversification strategy, we are looking at other sectors of the economy, including agriculture, and seeking opportunities to develop them further.
Diversification will not only create new sources of growth; it will also make the economy more resilient.
We are also looking at improving productivity, both within the civil service and across the private sector. The private sector is generally able to manage its own productivity, but the public sector has significant room for improvement.
We also want to improve the performance of our state-owned enterprises. Some need to be enhanced, while others could potentially be transferred to the private sector. There may also be opportunities for mergers to streamline state-owned enterprises. There is potential for additional growth through these reforms.
Another important priority is ensuring that more women participate in the economic functions of the country, whether as employees or entrepreneurs.
So, going forward, we are not only looking at how we function on a day-to-day basis. We want to achieve sustained growth of around 5% to 7% while building a more diversified, productive and resilient economy.
6. Finally, what message would you like to share with Los Angeles Times readers about Fiji as a stable, growth-leading economy and an attractive destination for investment, business and long-term partnerships?
To the readers of the Los Angeles Times, my message would be simple: look beyond what you know of Fiji from the postcard and see the opportunities that exist here.
We recently received the President of the Asian Infrastructure Investment Bank, and this was also her first visit to Fiji. When she arrived, she looked around and immediately noticed the environment. When she flew over the countryside, she saw the opportunities that exist here.
Sometimes it takes somebody from outside to point that out. For those of us who live in Fiji, we can perhaps appreciate it less because we are here every day.
Fiji is renowned for its beauty and warm hospitality, particularly because of its people. You have spent five days here, so you have experienced that yourself.
But we can offer much more than being a tourism destination. That is one of the reasons tourists continue to return year after year, not only because of our natural beauty, but because of our people and our hospitality.
This can be enhanced as we build a modern, resilient and outward-looking economy that attracts not only tourists, but investment, innovation, value creation and long-term partnerships.
We also have investment incentives. We need additional hotel room capacity, and we have seen tourism projects being developed in other countries that are targeting similar opportunities.
In Fiji, we have incentives for hotel operators, construction and warehouses. We have also introduced new incentives and concessions for businesses involved in renewable energy, including solar.
Fiji offers much more than what people see on a postcard. We offer a platform for investment, innovation and long-term partnership in the Pacific.
