Fiji’s fiscal management is receiving accolades for its commendable discipline, as the government concluded the 2024–2025 financial year with a deficit of only 2.4 percent of GDP, significantly lower than initial forecasts. This achievement, noted in the latest Westpac Wave Fiji Economic Update and Outlook, marks the most favorable fiscal deficit since the 2016–2017 fiscal year, driven by prudent financial practices and effective revenue collection initiatives.
Total government revenue for the year hit a record $4.05 billion, exceeding both original and updated targets. Contributing to this impressive figure, tax revenues rose by 12.2 percent year-on-year, amounting to $3.48 billion. Stronger performances in corporate tax, value-added tax (VAT), and personal income tax were the primary factors behind this increase. The report highlighted that VAT collections alone jumped by $173.4 million compared to the previous year, showcasing the effectiveness of revenue reforms and robust compliance efforts.
Alongside higher revenues, the government’s expenditure was kept in check, totaling $4.39 billion, which was 1.2 percent below the revised estimate. Both operating and capital expenditures were lower than anticipated, reflective of realistic fiscal controls and careful prioritization of spending.
As a result of these measures, Fiji’s debt-to-GDP ratio has decreased to 77.1 percent, down from 79.0 percent the year before, indicating improved debt sustainability. According to Westpac, this fiscal performance reflects the government’s strong commitment to maintaining fiscal responsibility and promoting economic stability.
However, looking forward, Westpac cautioned that the outlook for FY2025–2026 necessitates careful management. The new budget anticipates a projected deficit of $886 million, equating to 6.0 percent of GDP, potentially one of the highest nominal deficits in Fiji’s history. Despite this, the government possesses healthy cash reserves of nearly $900 million as of August 2025, providing a liquidity buffer and flexibility in debt management.
The report concluded that the recent fiscal outcomes underscore a positive return to fiscal prudence in Fiji, laying a strong foundation for future economic stability. The challenges ahead will require sustained discipline, efficient project execution, and diversified revenue streams to ensure continued fiscal resilience and economic development.