It is a disappointingly flat budget. The SDL government has run out of ideas on how to get Fiji’s economy back on track. The budget measures fail to address the serious problems facing our economy.
The budget does little to stimulate the rural sector. Government’s decision to revert the sugar export tax from 10% to 3% is timely and has certainly saved it from problems it could have faced in the 2004 season.
The worrying features of our economy are:
- substantial decline in the foreign reserves – down from $830 million in 1999 to $665 million (September 2003)
- escalating net budget deficit – up from $10 million in 1999 to $213 million in 2002
- rising levels of public debt – up from $1.37 billion in 1999 to $1.9 billion in 2002
- unacceptable level of inflation – up from 0.2% in 1999 to a high of 4.7% in 2003
- steadily depreciating dollar – the Fiji dollar has depreciated significantly against the dollars of Australia and New Zealand, our major trading partners.
The substantial erosion of our foreign reserves is indicative of high capital outflows and falling export earnings, particularly in the sugar and garment sectors. Huge capital outflows point to a lack of confidence in Fiji’s future. Our fast depreciating dollar is another reason why people are pulling their money out and investing in countries with more stable currencies.
The escalating budget deficit indicates a lack of financial and fiscal discipline. Government expenditure in 2003 is expected to be $30 million more than originally budgeted, while revenue is expected to be down by $56 million. The effect of this is that government will borrow $86 million more in 2003 to offset these deficiencies.
The rising level of public debt (almost $2 billion) has substantially increased the loan repayment component of the budget, leaving little money for the productive sectors.
The SDL government has borrowed $700 million in the at three years and it continues to borrow more. This huge borrowing has put pressure on our dollar and contributed to fanning inflation to unacceptable levels.
The worsening trends and indicators are clear evidence of reckless mismanagement of government finances and the national economy by the SDL government.
Mahendra P Chaudhry
Fiji Labour Party