[Photo: FILE]

The $1.5 billion Australian financing package will include about $1 billion in grants and $500 million in loans.

The 10-year deal will fund Fiji’s major development priorities.

Permanent Secretary for Finance Shiri Goundar said the 10-year financing commitment under the Vuvale Union would provide greater certainty for Government as it plans and budgets for major projects.

He states that the $1 billion grant component will not create debt, which is particularly important given Fiji’s limited fiscal space and increased debt levels following the COVID-19 pandemic.

“The treaty provides predictable financing support for the next 10 years. Almost a billion dollars in grants and around $500 million in loans.”

Goundar points out that Fiji faces a significant infrastructure gap, but the government’s ability to finance major projects from its own resources remains constrained.

He said the grant funding would therefore provide relief while allowing the government to invest in projects that may otherwise be difficult to finance.

The financing is not limited to direct project spending.

Goundar adds that the Australian funding can also be used to leverage additional financing from multilateral institutions such as the Asian Development Bank and World Bank.

He points to the health sector, where Australian grant funding is being used to secure additional financing from multilateral partners.

The indicative breakdown includes $228 million in grants and $550 million in loans for infrastructure development and climate resilience.

This includes projects linked to Nadi River flood alleviation, shipbuilding and other future infrastructure investments.

A further $158 million is earmarked for health, while $284 million is allocated to fighting transnational crime and illicit drugs.

Goundar says the economic value of the agreement goes beyond the $1.5 billion financing commitment.

He said stronger infrastructure, secure supply chains, protection from economic shocks and efforts to tackle transnational crime will have wider economic benefits for Fiji.

Importantly, Goundar said the funding would not sit outside Government systems.

He says the money will be appropriated and budgeted through Fiji’s national budget, with spending subject to procurement procedures, financial reporting, internal and external audits, and Parliamentary oversight.

The loans will be channelled through the International Infrastructure Financing Partnership, while specific projects will be governed by subsidiary agreements between Fiji and Australia.

Goundar said the predictable financing would allow the Ministry of Finance to plan projects with greater certainty over the next decade.