The International Monetary Fund in its latest release has stated that the recovery and ongoing broad consultations make the upcoming budget a critical opportunity to begin rebuilding Fiji’s fiscal space and reducing vulnerability.

It further states that while the risk of debt distress is currently moderate, high debt levels leave Fiji vulnerable to future shocks, with little space to respond.

However, the IMF says the authorities’ commitment to fiscal consolidation is therefore highly welcome, and it is vital to follow through with the necessary measures.

The release has come after the Executive Board of IMF concluded the Article IV consultation with Fiji and considered and endorsed the staff appraisal without a meeting on a lapse-of-time basis.

It says the staff recommends setting a fiscal rule in Fiji, for example, an anchor based on debt-to-GDP.

It further says Fiji should pursue a front-loaded consolidation relying mostly on a comprehensive tax reform strategy which raises revenue, simplifies the tax system, and enhances efficiency.

The IMF says revenue mobilization should be accompanied by increased spending on inclusion which includes targeted transfers to offset any impact of tax hikes on low-income households and growth-enhancing reforms, such as cutting red tape.

Overall, the IMF says spending should be disciplined and gradually re-oriented to boost growth, enhance resilience, and promote inclusion.

To safeguard progress, the IMF is suggesting that the authorities should closely monitor and address fiscal risks, including from contingent liabilities related to financially weak public companies.