The next fiscal direction will be outlined in the national budget on June 26. [Photo:FILE]

Fiji is facing a widening gap between government spending and revenue, raising concern over long-term debt sustainability.

Latest fiscal data shows government expenditure has risen by about 30 per cent over the past three years.

The increase is driven by higher public wages, social services, infrastructure spending and debt repayments.

For 2026, revenue is projected at $3.9 billion while expenditure is expected to reach $4.8 billion.

Acting Head of Strategic Planning at the Ministry of Finance Poonam Singh said the issue was not only the level of spending but whether it delivers stronger growth, productivity and better services.

She said Fiji has made progress in restoring fiscal stability. The deficit has fallen from 12.3 per cent of GDP during the pandemic to 2.5 per cent in 2024–2025. Public debt has also declined from 91.8 per cent to 79 per cent of GDP over the same period.

However, she warned that fiscal pressure is building again as available fiscal space continues to tighten.

Singh said spending pressures are rising at a time when revenue remains constrained, placing more strain on the national budget.

International guidance, including from the International Monetary Fund, recommends tighter fiscal management, targeted social assistance and a gradual move toward a two per cent budget surplus in the medium term to help reduce debt levels.

The IMF also advises shifting spending toward productive investment and strengthening conditions for private sector growth.

Singh said Fiji must improve the quality of public spending, reduce inefficiencies and prioritise investments that deliver long-term economic returns.

She adds that private sector investment will be central to future growth, with reforms needed to improve the business environment, expand access to finance and address skills shortages.

The next fiscal direction will be outlined in the national budget on June 26 with focus expected on balancing growth, debt management and economic resilience.

Singh was speaking at the State of the Economy Dialogue 2026.