This year’s national budget takes a deliberate expansionary stance to cushion Fiji from rising global risks and to respond to long-standing domestic needs.

This, according to Finance Minister and Deputy Prime Minister Professor Biman Prasad.

The government has increased spending, lifting the deficit from 3.5 percent to six percent with the aim of supporting vulnerable households, reviving infrastructure, and driving economic growth.

“So the reduction in VAT was possible partly because we are able to see the other aspects of the economy where we feel that even with the reduction in 2.5 per cent VAT and if the consumption and if the businesses, which is what I said, pass the reduction in the VAT, reduction in duties and other relief given to the people, then we would be able to collect additional revenue.”

Professor Prasad points to three main reasons for this approach and that is to prepare for global economic headwinds, to address infrastructure and service delivery gaps, and to provide additional support to civil servants, pensioners, rural communities and farmers.

He believes that the $800 million injected into the economy through pay rises, tax cuts, and VAT relief is expected to stimulate local consumption and investment.

Despite the higher deficit, according to Professor Prasad, it remains under 80 percent.

He believes continued revenue reforms, low inflation, and stronger-than-forecasted growth will help keep debt sustainable.

Professor Prasad shared that past reforms have put the government in a strong fiscal position.

Fiji, he says, is now collecting more revenue than forecasted and attracting record investment interest, especially from the diaspora.

The government is confident of exceeding its revised 3.2% growth forecast if global conditions remain stable.

To address governance and transparency, he points to new measures like linking mobile e-wallets to TINs as part of a broader strategy to reduce tax evasion, strengthen compliance, and tackle illicit financial flows tied to crime and drugs.

On borrowing, Professor Prasad says 65 percent will be raised locally and 35% externally, mostly through concessional loans with low interest and long grace periods from partners like the World Bank and Asian Development Bank.

He states that ongoing negotiations for more direct budget support and highlights stronger international engagement as a core strength of the current administration.

Professor Prasad maintains that the focus now is not just on recovery but on setting Fiji up for long-term resilience, investment, and inclusive growth.

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