News

2019/20 Fijian National Budget Updates

June 7, 2019 7:46 pm

Economic and financial consolidation and at the same time ensuring consistency in tax policies is the hallmark of the 2019/2020 National Budget.

Budget Documents

Government has set its expenditure at $3.84 billion and total revenue forecast at $3.49 billion, with this our net deficit is budgeted at $349.2 million or 2.7 percent of our Gross Domestic Product.

Article continues after advertisement

Given the level of net deficit, the Government’s debt stock is estimated to be around $5.97 billion or 47.1 percent of GDP at the end of July next year.

Government expenditure growth is around 4.8 percent with revenue projected to grow by 7.2 percent and tax revenue growth is expected to be around 5.9 percent in line with the nominal GDP growth rate.

Government expenditures have been scaled back in the budget with a strong focus on improving operational efficiency and the need to build fiscal buffers following the substantial reconstruction spending post-TC Winston and the successive natural disasters in 2018.

Procedures are also in place to cater for the economic global slowdown which is expected to affect our export demand, tourism activity and inflows of foreign exchange into the country.

VAT

VAT collections are the largest source of revenue for government.

VAT revenue is expected to increase to $805.5 million in 2019 and to $855.5 million in 2020.

Slower growth in VAT collections is expected in line with the current global economic slowdown and softening of domestic growth.

Government Debt

Government’s debt position remains sustainable and is in line with international benchmarks.

Total debt at the end of July 2018 stood at $5.22 billion equivalent to 45.9 percent of GDP.

Debt is projected to be 47.1 percent of GDP at the end of July 2020.

Inflation

As of May 2019 inflation stood at 2.1 percent, significantly lower than 4.8 percent recorded at the end of 2018.

Remittances

Personal remittances stood at $564.0 million in 2018 and are expected to increase by 3.3 percent to $582.6 million in 2019.

Direct and Indirect Tax

Total direct tax collections are anticipated to decline to $768.5 million in the last budget, mainly due to large one off corporate tax collections in the previous year.

For 2019-2020, direct tax collections are projected to increase to $804.8 million or by 4.7 percent.

Total collection for indirect taxes revised forecast for the last budget is estimated to increase to $2.09 billion with the total projection for 2019-2020 is $2.22 billion, an increase of $131.1 million or 6.3 percent.

Earlier on…

Revenues Arrears

Arrears of revenue by government have increased from $199 million in July 2017 to $241 million in July 2018, mainly attributed to a growth in unpaid taxes and customs duties.

The major arrears of revenue was from unpaid taxes and customs duties ($151.1 million), followed by water charges ($35.8 million), crown rents ($24.0 million) and Judicial fees & fines ($13.3 million).

Interest Rates

Lending rates in the banking sector remained relatively low and stable due to strong competition amongst banks and adequate liquidity in the banking system.

However, time deposit rates have increased due to the decline in liquidity levels compared to last year

Revenue and Taxes

The 2019/2020 National Budget is estimated to generate a revenue of $3.491bn passing the $3bn threshold for the first time.

In his budget address the Minister for Economy, Aiyaz Sayed-Khaiyum revealed that the government will be collecting this revenue without raising VAT, without increasing corporate taxes and without increasing the personal income tax threshold.

Sayed-Khaiyum says that it took Fiji over 35 years to reach $1bn in tax revenues since independence adding that it took another 10 years after that for Fiji to reach $2bn in tax revenues.

He stressed that it took the FijiFirst government only 5 years to take the country’s tax revenues from $2bn to $3bn all the while steadily decreasing the tax burdens faced by ordinary people.

Sayed-Khaiyum reiterated that VAT was decreased from 15 percent to nine percent and that families earning $30,000 a year have been freed from paying income tax entirely and small businesses have been exempt from paying Environment Climate Adaptation Levy.

The Minister for Economy also announced that projected expenditure for the 2019/2020 National Budget is $3.84bn reflecting a lower deficit of 2.7 percent of GDP down from 4.4 percent in 2017/2018 and 3.4 percent in 2018/2019.

Sayed-Khaiyum also stressed that with a GDP of $12.7bn and debt $5.98bn Fiji’s debt to GDP is projected to 47.1 percent of GDP adding that this means Fiji’s debt to GDP ratio is 6 percentage points lower than 2016.

He also revealed that as of this month, Fiji’s Foreign Reserves is around $1.92bn which is equivalent to 4.2 months of imports of goods and services and the current rate of inflation stands at 2.1 percent.

$419.4 million for FRA 

The Fiji Roads Authority has been allocated $419.4 million of which $19.7 million is for operating expenditure and $399.8 million for capital expenditure.

$60 million has been allocated for ongoing maintenance. $36.1 million is for renewals and replacement of roads while $62.4 million has been allocated to upgrade and replace bridges and crossings.

$26.4 million has been provided to relieve congestion and improve road capacity project, $33.5 million for community programme to improve the quality of roads and enhance pedestrians safety.

$8.7 million has been allocated for street lights and traffic signals.

$400,000 has been given to construct public toilets the Highways.

Minister for Economy Aiyaz Sayed-Khaiyum says more bus stops will also be built at strategic locations between Suva- Nausori corridor.

National Men’s and Women’s 7s side’s to get $2.1m

$4 million have been allocated for the overseas sporting tournaments.

The National Men’s and Women’s 7s side’s will get $2.1million to prepare for the 2020 Olympics in Tokyo, Japan.

This has been announced by the Economy Minister Aiyaz Sayed Khaiyum in the 2019/2020 budget.

The Flying Fijians has been allocated $650,000 to prepare for the Rugby World Cup in Japan later this year.

Fiji Sports Commission Chairman Peter Mazey says defending the Olympic gold medal is the big one for Fiji.

Free milk program for year one students to now be restricted

The free milk program for year one students will now be restricted to students in the rural and maritime regions in the 2019/2020 financial year.

The Minister for Economy Aiyaz Sayed-Khaiyum says that the government will continue to keep a close eye on the outcomes of this.

Sayed-Khaiyum says that they have seen that students play a game of who can stomp on their milk box the hardest and the winner being whoever squirts the milk at a greater distance.

He says that while you can provide milk you can’t force students to drink it.

The Minister for Economy says that it’s a shame because in some parts of the country the availability of milk has a measurable and positive impact for year one students.

Economy not crippled with infrastructure reconstruction post-Winston

The reconstruction of infrastructure damaged by natural disasters since 2016 has cost the government $500m without crippling the economy.

While delivering the budget announcement in Parliament tonight, Minister for Economy Aiyaz Saiyed Khaiyum says this was possible because of a healthy economy under the Bainimarama Government.

“The scale of the rebuilding effort was only possible because of the strength of our economic position prior to Winston. As we conclude that re-building effort, we can now say without a shadow of a doubt that the Fijian economy is the most climate-resilient it has ever been.”

Khaiyum says TC Winston wiped out one-third of the value of the national GDP.

“And over the years the price tag of this storm has proven immense with the total costing the economy of an astonishing $500m. Those costs were component by the devastation of cyclone Josie, Keni and Gita in the years that follow.”

The Economy Minister adds they have put in more effort to build better and stronger schools with resilient building plans providing high-quality materials for homes and re-deploying infrastructure in a climate-conscious manner.

Next phase for Digital Fiji

The next phase for Digital Fiji will involve combining sources of data into streamlining easy to access hubs, one for our citizen information, another for business information and the third for land information as stated by the Economy Minister Aiyaz Sayed Khaiyum while announcing the 2019/2020 National budget.

Sayed Khaiyum says right now information across government is outdated and completely unavailable at worst and is one of the reasons people find themselves waiting for days or weeks longer than necessary for approvals.

The Economy Minister says the government will create a people hub centralized information curator and publisher within the government.

Sayed Khaiyum adds when someone applies for government services, that person’s basic information such as name, date of birth and TIN can be pulled up and viewed in real time by government officials who have the relevant excess privileges.

Fijians can trust their information is safe and the ministry can trust the information is up to date without having to ask any more of that person seeking the services according to Sayed Khaiyum.

By February next year, People Hub will be operational and the Economy Minister says for someone living in Taveuni who qualifies for Social Welfare assistance will no longer travel to the BDM Office to obtain his or her birth certificate to take to the social welfare office.

Instead, he or she needs to provide basic details online.

Sayed Khaiyum says the Ministry of Social Welfare will then be able to validate his/her information against a secured database or the People Hub.

The information can then be verified online and that same day the person can complete his/her registration process to begin receiving the assistance without having to leave their homes.

Government to undertake study on the issuance of National IDs

The government will soon embark on a nationwide study to lay a ground work for the issuance of national identification cards.

Economy Minister Aiyaz Sayed-Khaiyum says verifying identities is an issue with the increasing identity theft cases recorded so far.

Sayed-Khaiyum says the national identity cards will allow processes to be more efficient.

He says this will also ensure that all our assets are secure.

The study is scheduled for six months and is set to be completed in December 2021.

This will also allow the establishment of a National Identification Office to provide these services.

Record 10th year of growth for Fijian economy: Minister

Minister for Economy Aiyaz Sayed-Khaiyum says this will be record 10th year of growth for Fijian economy.

During the announcement of 2019/2020 budget, Sayed Khaiyum revealed that they expect the GDP to grow to $12.7 billion this year.

He says Fiji is headed in the right direction and this is reflected in our economic growth.

Government working towards e-passport with added security features

The Government is working on the transition from paper-based passport to state of art e-passport with added security features.

Economy Minister Aiyaz-Sayed Khaiyum says the e-passport will make it difficult for people to illegally enter the country.

This is also to make Fiji more secure.

He adds this will make it easier for Fijians travelling overseas to use the e-passport gates to speed through the airport immigration queues.

He says they are not only making Fiji safer but also setting up Fiji for wider visa-free status access around the world.

Sayed -Khaiyum says the new e-passport will be issued throughout the next financial year.

Biz Fiji portal to be rolled out on the 10th of July

A new information portal called the Biz Fiji portal will be rolled out on the 10th of July this year.

Minister for Economy Aiyaz Sayed-Khaiyum says that the portal will give business owners a comprehensive one stop reference for all processors associated with starting a new enterprise or obtaining a construction permit.
The Minister stressed in Parliament that the portal will give users the ability to access and download the application to start a business or obtain a construction permit.
Sayed-Khaiyum also says that it will provide the flowchart and time tables of exactly what they can expect throughout their registration process.

Ban on single use of plastic bags on track

The Government is on track to ban the single use of plastic bags in seven months.

Minister for Economy says the duty on plastic bags to the thickness of more than 50 microns will be increased in the next financial year.

He says they will be promoting the use of locally produced reusable bags and to assist the emerging industry and the duty on the material used to produce non-woven bags will be dropped to zero.

He says to protect the local reusable bag manufactures, fiscal duty on imported reusable non-woven bags will be increased to 32 percent.

25 more channels on Walesi Platform

25 more channels will be made available to Fijians through the Walesi Platform.

Economy Minister Aiyaz Sayed Khaiyum says this will provide better educational content, especially for all Fijian students.

He says students in outer islands will also be able to access educational content.

Sayed-Khaiyum says Fijians will also have better access to sporting activities as Fiji actively partakes in sporting events.

He says as of now 260,000 Fijians use the Walesi App showing the growing need for such platforms.

He says access to the Walesi platform will be increased in schools as well this year.

Subsidized bus fare rates for school students

School students who receive transport assistance will now only be able to travel with the subsidized bus fare rates till 4.30pm on designated buses.

Minister for Economy Aiyaz Sayed-Khaiyum made this announcement during the 2019/2020 National Budget Address in response to the abuse of the transport assistance to students.

Sayed-Khaiyum says there has been an unacceptable rise in truancy as a result of allowing students to travel in any bus until 7pm.

He also said that parents have also been seen using these cards by hiding the cards behind their phone covers.

Sayed-Khaiyum says that when we tolerate abuse we not only do a disservice to our Nation and to those who actually deserve our help, but we do a disservice to the abusers themselves especially when they are young people.

He says that when someone spends their childhood getting away with disrespecting the law, they become adults who are comfortable with breaking rules on a regular basis.

$3.491 billion in revenue for 2019/2020

The expected revenue to be generated in the 2019/2020 financial year stands at $3.491 billion.

Minister for Economy Aiyaz Sayed-Khaiyum says this is the first time Fiji will go past the $3 billion revenue.

Sayed –Khaiyum says the Government will collect the tax revenue without raising vat, corporate tax and without increasing personal income tax.

Projected expenses stand at $ 3.84 billion.

National Youth Awards

Young people will now be able to celebrate their work and achievements on a national scale after the government allocated $200,000 to introduce a National Youth Awards in Fiji.

The Minister for Economy highlighted that when we celebrate youth achievements, we show young people that their hard work means a great deal to the nation.

He says that Awards will unite ministries and departments into one government-wide effort to give deserved recognition to high achieving young Fijians.

From agriculture to athletics, social work, entrepreneurship, technology and innovation, Sayed-Khaiyum says that these awards will spotlight the potential of young Fijians to their friends, family the nation and the rest of the world.

Sayed-Khaiyum also announced that government will continue to Young Entrepreneurship Program with a funding of $500,000 awarding grants up to $30,000 per person with recipients sure to also be competing for the National Youth Awards.

‘Peoples Hub’ to be activated Next February

A new platform known as ‘Peoples Hub’ will be activated in February next year to provide an online platform for people to apply for Government assistance.

Economy Minister Aiyaz Sayed-Khaiyum says people living in outer islands who qualify for Government assistance will not need to travel to the Birth, Death and Marriage office but make online requests and applications.

Sayed-Khaiyum says people will be able to provide their personal information online and the Department of Social Welfare will validate the information that is provided.

He says on the same day people who qualify for incentives will be able to complete their registration with the ministry.

The Minister says this will prevent unwanted travelling, will help save cash previously used for travelling and avoid unwanted running around.

Fijian Embassies in Brazil, Ethiopia to close down

Fijian Embassies in Brazil and Ethiopia will close down says Economy Minister Aiyaz Sayed-Khaiyum.

Sayed-Khaiyum says this is being done to streamline global engagements.

He says presence in India will be increased.

$500,000 has also been allocated to establish a new trade commission in India.

Nadi River Alleviation Project to begin next year

The Nadi River Alleviation Project will begin next year.

Economy Minister Aiyaz Sayed- Khaiyum says this project once completed will reduce flooding in Nadi towns and nearby villages.

Sayed-Khaiyum says the government received support from the Japanese government in undertaking this project.

The total cost of the projects is $7.95million.

Economy Minister rubbishes Rabuka’s claim

Economy Minister has rubbished the claims made by the Opposition Leader Sitiveni Rabuka who is claiming that the nation is facing a crisis.

Aiyaz Sayed-Khaiyum says the Bainimarama Government had inherited a debt level of 53 per cent of GDP in 2006.

He says past governments were not making the required investment.

Sayed Khaiyum took a swipe at Rabuka who claimed in one of the dailies that Fiji is facing an economic crisis.

He questioned whether Rabuka understands about crisis considering that he led the nation to crisis when he was the Prime Minister.

Sayed-Khaiyum says he crashed the National Bank of Fiji.

He says the reckless sabotage of the Fijian economy cost Fijians $500 million in today’s term.

Fiji’s Operating Expenditure for the 2018-2019 Financial Year stands at $2.534 billion.

Minister for Economy Aiyaz Sayed-Khaiyum made the highlight while delivering the 2019-2020 National Budget.

The Minister for Economy also says that the Capital Expenditure stands at $1.25 billion.

More certainties for private sector

The Fijian Government is providing new certainties to partners in the private sector.

Economy Minister Aiyaz Sayed-Khaiyum says the Asian Development Bank are also stepping into financing our loan application with policy-based loan support.

Sayed-Khaiyum says through this the Fijian Government intends to use the funds to redeem $200 million global bonds in October 2020.

The Economy Minister says these grants will be accessed in two trenches.

He says Fiji is on track to access the full trench of this policy based support before October 2020.

Sayed-Khaiyum adds this will also temporarily increase our debt this financial year but the debt will go down when we redeem the global bond in 2020/2021 fiscal year.

Economy not crippled with infrastructure reconstruction post-Winston

The reconstruction of infrastructure damaged by natural disasters since 2016 has cost the government $500m without crippling the economy.

While delivering the budget announcement in Parliament tonight, Minister for Economy Aiyaz Saiyed Khaiyum says this was possible because of a healthy economy under the Bainimarama Government.

“The scale of the rebuilding effort was only possible because of the strength of our economic position prior to Winston. As we conclude that re-building effort, we can now say without a shadow of a doubt that the Fijian economy is the most climate-resilient it has ever been.”

Khaiyum says TC Winston wiped out one-third of the value of the national GDP.

“And over the years the price tag of this storm has proven immense with the total costing the economy of an astonishing $500m. Those costs were component by the devastation of cyclone Josie, Keni and Gita in the years that follow.”

The Economy Minister adds they have put in more effort to build back better and stronger schools with resilient building plans providing high-quality materials for homes and re-deploying infrastructure in a climate-conscious manner.

Complete phase-out of styrofoam containers

The Minister for Economy Aiyaz Sayed-Khaiyum has announced a complete phase-out of styrofoam containers by 1st January 2021.

The Minister says that they will out a nationwide consultation and awareness campaign in ample notice to restaurants, coffee shops, groceries stores and convenience store to prepare for the transition.

Acts under review to meet our modern economy

The government is currently reviewing the Foreign Director Investment Act.

Economy Minister, Aiyaz Sayed Khaiyum says this is to encourage greater foreign investment.

Sayed Khaiyum says they are also reforming state enterprises and public enterprises to make it more customer orientated, profitable and efficient.

He adds they have also launched personal property security’s registry, which make it easier for our people to use their assets as collateral to secure loans.

“This has also allowed businesses, small and medium enterprises to make the investment at a lower cost with greater efficiency.”

The Financial Management Act is also under review in an effort to help meet the high expectations on transparency and accountability in our modern economy.

$200,000 allocated for newly introduced National Youth Awards

The Government has allocated $200,000 to a newly introduced National Youth Awards in the country.

Economy Minister Aiyaz Sayed- Khaiyum says this will allow all ministries to recognize youth outstanding contributions.

He adds these awards will spotlight the potential of young people to everyone and to the world.

Sayed-Khaiyum says celebrating youth achievements will show the young people that their hard work and achievements mean a great deal to the nation.

The Government has also implemented Youth Focus policies to ensure their voices are heard.

He adds the capability of youth was fully displayed during the ABD meeting last month.

$800,000 to combat drug trafficking

The Fiji Police Force has been allocated $800,000 to combat drug trafficking in the country.

Minister for Economy Aiyaz Sayed Khaiyum says nature and tactics of criminal operations are evolving giving a rise to criminality particularly in the trade of hard and synthetic drugs.

He says the Fiji Police Force needs to evolve in response.

He adds that 995 Special Police Constables will also become regulars as part of Police restructure.

World Bank declares Fiji eligible to receive International Development Assistance

The Minister for Economy Aiyaz Sayed-Khaiyum while delivering the 2019/2020 National Budget Address has revealed that the World Bank has declared Fiji eligible to receive International Development Assistance (IDA).

He says this is in recognition of Fiji’s extreme vulnerability to climate change.

Fiji can now access over $55 million annually at a 0 % interest rate with an extended repayment of 40 years.

Sayed-Khaiyum says that’s over $55 million a year in development funding on the best terms a nation could ask for.

He says there is an expectation, the Asian Development Bank to follow suit in offering similar terms in recognition of the extreme climate threats faced by Fijians.

The Minister for Economy Aiyaz Sayed-Khaiyum says that Fiji is nearing an agreement with the Japanese International Corporation Agency (JICA) to provide a standby loan for recovery rehabilitation.

He said this while delivering the 2019/2020 National Budget Address.

Sayed-Khaiyum says that when cyclones do descend upon Fiji, we cannot afford to watch critical development funding being stalled.

This will fund immediate disaster relief efforts, in the aftermath of the severe weather event.

He says that under the terms of this agreement the moment the government declares a state of emergency rapidly deployable funding of up to 50 million USD will be made available at an extremely concessional rate of 0.01% with a 40-year tenure and a 10 year grace period.

Serious concern on the abuse of Family Care leave
The Minister for Economy Aiyaz Sayed-Khaiyum has revealed that 45 employees from the same factory had taken Family Care leave within this week alone.

The Minister raises a serious concern and says that they will work with business to ensure that there is no more abuse of the policy.

He says that the abuse of the Leave is grinding businesses operations to a halt.

First home buyers reform to continue
The reforms to the First Home Buyers Grant will continue next year.

Minister for Economy Aiyaz Sayed-Khaiyum says the existing interest rate subsidy of one percent to first time home and land buyers will also remain in place.

The Minister says families with an annual household income of $50,000 or less can receive loans of an extremely concessional nature with a maximum interest rate of 5% over a maximum term of five years.

He says $2m will be allocated to extend a highly, engineered and fully serviced subdivision to provide for more than 100 new cyclone-proof housing for the disabled and low-income families.

More film production can be expected to be shot in the country
This came about after Minister for Economy Aiyaz Sayed-Khaiyum announced that government is introducing a seven year tax holiday for capital investment above $2 million for companies who will invest in film production in the country.

More upgrades in transportation sector expected
More upgrades in the transportation sector can be expected.

This is after it was announced in the national budget that duty on heavy machinery will drop.

There will a drop in import excise duty on purchase of new buses from 5% to 0%.

Used buses will attract 5% duty but excise duty on new buses will drop to zero.

New machinery will now attract 0% excise duty and the fiscal duty of second-hand machinery will drop from 15% to 5%.

The excise duty on new trucks, vehicles designed for transporting goods will fall to 0%.

The fiscal duty on these used trucks will fall from 15% to 5%.

Economy Minister Aiyaz Sayed-Khaiyum says this is the perfect time for all public service transport providers to upgrade their services.

He says Fijians can expect comfortable, safer public transport.

Sayed-Khaiyum says businesses will benefit from this as well.

Education Sector allocated with more than $800m: Major changes in Scholarship Qualification Criteria
The Education Sector have been allocated more than $800m for the next financial year.

The Education budget has come with many changes as some students and institution are found abusing the Scholarship system in place.

Minister for Economy Aiyaz Saiyed Khaiyum says some Universities are bending the rule in order to fill their own pockets by allowing students who failed Year 13 to do Degree courses.

“We won’t tolerate tax payers’ hard earned money funding for those unnecessary expenses any longer. We are taking a hard look at the pathway towards higher education and taking some key steps to ensure students are entering higher education of a level playing field.”

Khaiyum adds they’ve noticed that some students have been abusing the current system, relocating themselves to new cities to pursue degrees that are available at their own local campuses.

He says there’s also a growing number of students who are opting to do foundation level instead of completing Year 13.

Due to the abuse of the system, the government has changed its scholarship qualification criteria.

“Khaiyum government will stop awarding TOPPERS Scholarships to students who emerge from foundation level as this not fair to those who completed Year 13 level. We also will no longer be allowing students to study at USP’s Technical Colleges to fund their education through TELS given the current policy and the difficulty to cross transfer of credit to and from other Universities.”

Meanwhile, Government schools will receive an increase in meal allowance to $6 per meal.

The government will also roll out special courses on public speaking and communication in partnership with various international organizations, focused on student leadership development in years 12 and 13.

$15K has also been allocated to strengthen social leadership training for students.

Following the announcement of an all-star line up to the FNU council, $6.9m have been allocated to move technical colleges to the Fiji National University in line with the government’s vision of establishing FNU as a world class institution.

The Economy Minster says they will not tolerate tax payers’ hard earned money funding for those unnecessary expenses any longer.

No increase in the excise duty on tobacco and alcohol

There will be no increase in the excise duty on tobacco and alcohol.

Minister for Economy Aiyaz Sayed-Khaiyum also says 100% of employer contribution to the FNPF will now be tax deducted.

There will be no stamp duty on off shore borrowings.

He says every item imported will attract only 5% fiscal duty and those items that currently attract 5% duty will be dropped to 3%.

Sayed Khaiyum says they will be lowering the investment threshold from one-million dollars to $250,000 to give smaller businesses and owners the chance to make similar investments.

He adds duties on heavy machineries, such as cranes, forklifts, bulldozers and excavators will also be reduced.

He says new machinery will now attract zero excise duty and the fiscal duty on second-hand machinery will be reduced from 15% to 5%

The Economy Minister says import excise duty on new buses will be reduced from 5% to zero percent.

He says fiscal duty on non-hybrid vehicles will increase from 5% to 15percent while excise duty on hybrid vehicles will drop to five percent.

Production Companies benefits from budget
200 percent tax reduction will be rolled out for production companies that brings equipment to Fiji to set up shops.

The Minister for Economy made the announcement during the 2019-2020 National Budget announcement.

Also, the import duties on new children clothing will be drastically cut from 32 percent to 5 percent.

The Minister for Economy says this will help retail shops with more affordable garments to the benefit of business owners and parents alike.