As partners in promoting global growth and financial stability, the Fijian Government and the International Monetary Fund (IMF) work in consultation to produce annual reports that review Fiji’s economic position and explore economic strategies. Over the past decade, these reports tell a consistent story of how the Bainimarama and FijiFirst governments have dramatically raised the capacity of the Fijian economy, responsibly managed national debt and diversified our economic mix, producing the longest stretch of economic growth in Fijian history.
We welcome the IMF’s 2018 Staff Report, which notes the continuing strength of our economic performance and the resilience of our economic growth. The 2018 report recognises that Fiji’s Gross Domestic Product sits at an all-time high; our nine straight years of economic growth and the positive projections for the years ahead; decreasing inflation; lowering unemployment; and high levels of foreign reserves. The report also outlines a number of important recommendations to enhance the consistent and responsible management behind the record-breaking success of our economy.
From the period of 2006 until 2016, Fiji’s debt as a percentage of GDP decreased, falling from 53% in 2006 to 47% in 2016. However, that trend was disrupted by the severe devastation of tropical cyclones Winston, Gita, Keni and Josie, which required large-scale public spending to address.
The strength of our economic position prior to TC Winston granted us considerable leeway to ease our fiscal policy to fund a comprehensive rebuilding effort to boost resilience across our economy. Our rebuilding effort has funded a network of more resilient infrastructure that will spare our nation considerable rebuilding costs over the long-term. This was a necessary short-term expenditure of around $500 million from 2016-2018 and a major factor behind the increase in our debt to GDP percentage to 50% in 2018. Were it not for the impacts of these severe natural disasters, our debt levels were projected to continue decreasing.
As we move out of the rebuilding phase from TC Winston, we plan to re-establish the trend set by the FijiFirst Government, prior to Winston, of reducing our fiscal deficits. We fully endorse the report’s recommendation that we move towards fiscal consolidation. Our plan of fiscal consolidation has been clearly set out in the 2019-2020 budget strategy that has been approved by Cabinet and which will be reflected in the 2019-2020 National Budget.
To generate private sector investment and activity, we will maintain our low tax regime, which remains the most attractive in the region, as well as a stable interest rate and policy environment. We will continue to improve tax compliance, closing additional loopholes in enforcement that have historically enabled financial leakages from our country. We will also continue our efforts to diversify our economic mix to ensure the sustainably of our economic growth and development.
We thank the IMF for working in close consultation with the Fijian Government to produce this 2018 Staff Report and we renew our commitment to the steadfast, responsible and forward-thinking economic management that has defined the past decade of our growth and development.