Asian Development Bank warns of Fiji’s fiscal strain

The Asian Development Bank’s Pacific Economic Monitor released last week noted that Fiji’s limited fiscal space is insufficient to absorb potential future disruptions, which remains a concern.

To maintain strong economic growth and enhance economic resilience, the government must focus on improving spending efficiency, strengthening budget execution, and promoting major private investment projects, the ADB said.

“This includes streamlining immigration and business application processes, which is critical to promoting new economic activity and facilitating additional hotel capacity in the private sector.

“While the current emphasis on fiscal consolidation is necessary to reverse the public debt trend, strengthening fiscal buffers and maintaining macroeconomic stability are equally important given Fiji’s vulnerability to economic shocks.

“Fiji’s limited fiscal space to absorb potential future disruptions remains a concern, highlighting the need for ongoing efforts to improve spending efficiency.

“Promoting growth-oriented spending and strengthening implementation capacity are critical to promoting resilient and inclusive growth and reducing debt levels.

“Given the critical role of SOEs in the economy, measures such as expanding regulatory and governance standards, strengthening SOE capacity, and establishing a framework to limit SOE guarantees could create additional fiscal wiggle room for productive investment.”