Fiji’s Coalition Government has exceeded expectations for the 2023-2024 fiscal year, their first year in office since winning the 2022 General Elections, with provisional financial records indicating a smaller-than-expected budget deficit and a reduction in national debt.
The government posted a deficit of $443.6 million, or 3.4% of GDP at the end of the 2023-2024 financial year, better than the 4.8% initially forecast. This marks a sharp improvement from previous years, at 7.1% in 2022-2023 and 12.1% in 2021-2022.
Revenues increased to $3.6 billion (27.7% of GDP) due to stronger tax and non-tax collections. Tax revenues reached $3.1 billion, exceeding forecasts by $60.9 million, largely driven by economic improvements in tourism and other sectors. Tax collections increased by 35.5% from the previous year, with a notable increase in VAT and corporate and departure taxes. Non-tax revenue also outpaced expectations, totalling $549.2 million, which included dividends, grants, and income from the sale of government assets.
Shiri Gounder, Permanent Secretary for Finance, noted that the government’s focus on fiscal discipline had contributed to the positive results.
“The path for fiscal consolidation was cemented with well-crafted revenue reforms and expenditure policies, alongside a robust economic recovery. Fiji’s economy remains buoyant backed by positive performances in key economic sectors such as tourism and other resource-based sectors, and improving business confidence,” Gounder said.
On the expenditure side, government spending stood at $4.1 billion, an increase of 13.9% compared to FY2022-2023. However, spending remained just below revised projections. Operating expenditure accounted for the bulk of spending at $2.99 billion, while capital expenditure totalled $1.02 billion. However, capital spending was slightly lower than forecast by $22.3 million.
The national debt, which now stands at $10.3 billion (78.3% of GDP), has dropped from 82.0% in 2022-2023 and 90.6% in 2021-2022. The debt composition is 63.9% domestic and 36.1% external.
Despite the strong performance, Gounder warned that risks remain, citing global economic uncertainties, a shortage of skilled labour, and potential weather-related shocks.
“The growth momentum is expected to improve in the near term with the kick-starting of some key tourism-related projects…nonetheless, negative spillovers from global developments, shortage of skilled labour, weather-related shocks, and capacity constraints in some sectors poses downside risks to the outlook.”
Fiji’s government is expected to build on this momentum as it rolls out key tourism-related projects and implements measures outlined in the 2024-2025 budget.
