ANZ Economist optimistic on Fiji's economic growth

July 8, 2024 6:44 am

Savusavu town

ANZ Pacific Economist, Kishti Sen says they’re slightly more bullish on Fiji’s economic growth prospects, as underlying drivers such as visitor arrivals, remittances and agriculture output remain solid.

Giving his feedback on the 2024-25 National Budget, Sen says their forecast is for the economy to grow by 3.4% this year.

The government is estimating the economy will grow 2.8 percent this year and three percent in 2025 and 2026.

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After some significant changes to the tax rates in the current budget, Sen says the government is banking on a growing economy and “bracket creep” where wage rises lift earners into higher income brackets, increasing overall tax revenue to do the heavy lifting for revenue growth in 2024-25.

ANZ Pacific Economist, Kishti Sen [FilePhoto]

Sen says the bottom line is that they expect the direct and indirect tax revenues forecast in Budget 2024-25 to be realised.

But he adds that they think budget support grants could unbalance consolidated revenue for budgets beyond next year.

Before the pandemic, budget support grants from bilateral and multilateral development partners that go straight into the government’s consolidated revenue were rare.

From 1992–2019, this source of revenue averaged $8m a year.

During the pandemic, it shot up to $284m in the 2020-21 fiscal year and $233m in 2021-22.

Sen says it then retreated to $167m in 2022-23 but is expected to rise to $192m in 2023-24.

Budget 2024-25 shows these grants are expected to remain high, at $179m in the next fiscal year.

However, he says as the pandemic shock fades, development partners may revert to traditional support like project financing rather than direct budget grants.