Arial Shot of Suva. [File Photo]

The public debt debate in Fiji cannot happen in isolation and it cannot be detached from the COVID-19 crisis says Permanent Secretary for Economy, Shiri Gounder.

Gounder says the debate should also include Fiji’s economic and fiscal response to the crisis in the last two years.

He adds the recent increase in public debt and the COVID-19 crisis are intrinsically linked and this contextualization is critically important to undertake any meaningful analysis on public debt.

Prior to COVID-19, Fiji’s debt to GDP was on a downward path and below 50 percent of GDP.

Gounder highlights Fiji was then hit by the COVID-19 crisis – a once in a 100 year event which had a devastating impact on our economy, jobs, socio-economic conditions and Government finances.

He says following the COVID-19 induced economic devastation and a decline in tax revenues by almost 50 percent, public expenditure had to be maintained near pre-pandemic levels to ensure no major disruption in the delivery of government services.

The government also funded large unemployment support and relief payments of almost $500 million to assist those affected.

The PS highlights other expenditures like civil service salaries, funding support to the health sector and spending on infrastructure and public utilities continued.

He says the multilateral agencies like the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank and bilateral partners like the Japan International Cooperation Agency, Australia and New Zealand supported Fiji with highly concessional financing and budget support grants.

Gounder says this reaffirmed that the fiscal response to the crisis was appropriate and the alternative of not borrowing would have been catastrophic for the Fijian economy, further worsening the socio-economic challenges.

He states that as Fiji now comes out of the crisis, and the economy is on the recovery path, the public debt to GDP ratio will be put on a downward trajectory as part of Government’s medium term fiscal strategy.

Gounder adds a mix of policies ranging from supporting a private sector led economic recovery, tax reforms, expenditure readjustment and other broader public sector reforms will be pursued.