Fiji Budget misses opportunity to diversify - economist

A Fiji economist has noted that the government's national budget could have done more to diversify the economy.

The government's new $US1.7 billion budget finds the country taking on a towering level of debt while offering tax breaks for the tourism industry.

Until the Covid-19 pandemic, tourism contributed around 35 percent of Fiji's Gross Domestic Product.

Neelesh Gounder said while a lot of people were hurting due to the tourism industry's woes, the pandemic had also exposed the country's over-reliance on the sector.

"Some of us had actually raised this before, in terms of policy bias towards the tourism sector.

"It's an opportune time now for policy makers to look at not only sugar, but agriculture and manufacturing as well," Dr Gounder said.

The University of the South Pacific economist said given the sugar industry's recent struggles, it would have helped to provide more incentive for farmers to boost production

He said the budget offered little direct economic relief to low income earners and households which lost jobs due to the pandemic

Dr Gounder also pointed out the mountain of debt incurred called for a radical solution.

"I would like to call on the World Bank, IMF and ADB to look at how they can help Fiji and other developing countries find a solution to this growing debt problem.

"I've also suggested the possibility of cancelling debt, totally cancelling it."

Dr Gounder said he didn't see any other way in terms of how debt of such a magnitude could be paid back.

"I'm not saying a lot of these countries are going to default in the next five or 10 years. But the issue I'm raising is that as debt service costs increase it will become increasingly burdensome, and the fiscal space that is needed to confront other challenges will simply not be there."

FLP slams unnecessary spending

Meanwhile the opposition Fiji Labour Party also expressed their disappointment over the Budget.

One issue was $US3.3 million provided for the construction of an office building for the Prime Minister which the party said could be put to better use.

Labour leader Mahendra Chaudhry said there were other pressing priorities which should take precedence.

In the meantime Chaudhry claimed the cost of renting office accommodation had "risen exponentially" under the current government.

Chaudhry said a further increase of $US3.8m was being proposed in the Budget, taking the total annual cost from $US12.7m to $US16.5m.

The former prime minister questioned how rental prices for government offices were going up when the property market had been in decline since late 2018.

He said he was also concerned at $US14.2m being allocated to the government's vehicle leases, calling it "excessive by any standards" - an increase by 76 percent from 2017.

He said there were too many government vehicles which was a luxury Fiji could not afford.

Chaudhry also criticised the $28.3m provided under the Recovery Rebate Package, to attract tourists, saying it was a "contrived method of channelling fresh funds to the debt-ridden Fiji Airways".

"Heavily discounted holiday fares and hotel packages have for long been a feature of our marketing strategy to lure Australians and New Zealanders to Fiji.

"The same packages could be used sometime in the future when the borders reopen and flights resume," he said.

Chaudhry also pointed out while other organisations were forced to accept cuts, the annual grant to the state-run Fiji Broadcasting Corporation had been maintained at $US5.3m.

"This is unacceptable more so when FBC has not tabled its annual report and audited accounts since 2017.

"The Economy Minister promptly suspends grants to schools if their accounts are not submitted when due."

FBC chief executive Riyaz Sayed-Khaiyum is the younger brother of Attorney-General and Minister for Economy, Aiyaz Sayed-Khaiyum, who delivered the 2020-2021 Budget last week.