Gradual deficit reduction to promote strong growth

March 13, 2024 6:54 am

Aerial shot of Suva City

The International Monetary Fund believes that Fiji needs to continue a gradual reduction in the deficit and its fiscal consolidation in order to promote strong economic growth.

IMF Fiji’s Mission Chief Marshall Mills says that normalization of monetary policy and an ambitious reform program should tackle the key constraints to growth, further boost resilience, and address long-term challenges.

Mills says that the government should tread carefully in terms of repaying its debt.

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“Our advice to the government going forward is to continue a gradual reduction in the deficit, a gradual fiscal consolidation. Not rapid so as to have any impact on growth or social needs.”

According to Mills, Fiji’s debt level is sustainable.

“The debt level, as I mentioned, is sustainable, but we are recommending a gradual effort to bring it down so it’s higher than we are currently comfortable with.”

While the risk of debt distress is still assessed as moderate, the IMF believes that the fiscal space to absorb potential shocks will remain limited.