Fiji’s financial performance for the 2024-2025 fiscal year has concluded strongly, demonstrating significant advancements in economic management. The fiscal deficit has decreased to 2.4% of GDP, which is a marked improvement from the budget estimate of 4.5% and down from last year’s 3.4%. This figure represents the lowest deficit since the 2016-2017 fiscal year, showcasing effective fiscal management and an increase in revenue.
Shamal Chand, a senior economist at Westpac Fiji, praised this outcome as a positive development, while also warning against complacency. He pointed out that the outlook for the upcoming 2025-2026 fiscal year could present obstacles, with projections indicating an anticipated rise in both the deficit and debt levels. Ensuring realistic budgeting and diversifying revenue sources will be crucial for maintaining fiscal stability moving forward, according to Chand.
This fiscal success was driven by record-high total government revenue, amounting to $4.05 billion, which significantly surpassed both initial and revised estimates. A strong tax revenue performance facilitated this growth, with collections rising 12.2% year-on-year to $3.48 billion. Key contributors to this increase included corporate tax, VAT, and personal income tax, with VAT alone rising by an additional $173.4 million compared to the previous fiscal year.
The government’s total expenditure was carefully managed at $4.39 billion, which was 1.2% lower than prior estimates. This included $3.25 billion in operating expenses and $1.06 billion for capital projects, both of which were below forecasted amounts. Such careful financial management corresponds to a historical trend of lower realized deficits than previously projected.
Chand also indicated that the prudent management has resulted in a lower debt-to-GDP ratio, which now stands at 77.1%, down from 79.0% the previous year, with domestic debt comprising 64.8% of the total. However, potential risks loom, particularly with the upcoming budget for FY2025-2026, which anticipates a deficit of $886 million or 6.0% of GDP—projected to be one of the largest in Fiji’s fiscal history.
On a positive note, the government holds nearly $900 million in reserves as of August, providing a strong liquidity position that can help manage debt and address emerging economic needs while affirming a commitment to sustainable debt practices.
Fiji’s recent fiscal management reflects a shift back toward prudence, laying a solid foundation for ongoing economic stability. As the government confronts the challenges that lie ahead, maintaining fiscal discipline and enhancing revenue diversification will be essential to bolstering resilience and promoting growth. By strategically investing in public services and infrastructure, the government aims to support the well-being of its citizens, fostering a positive outlook for the nation’s economic future.