Mini Budget 2022

Prudent measures helped avoid devaluation

March 24, 2022 9:25 pm

[Source: File Photo]

Fiji’s foreign reserve currently stands at around $3.2 billion, sufficient to cover 8.8 months of imports.

Minister for Economy, Aiyaz Sayed-Khaiyum, revealed this while announcing the 2021/22 revised budget.

Sayed-Khaiyum says this is well above the International Monetary Fund’s benchmark of three months.

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According to the Minister, when the tourism industry, our largest foreign exchange earner came to a halt, we faced a real threat of the Fijian dollar depreciating.

“But the proactive and robust by government the Reserve Bank of Fiji help avoid the devaluation of the Fiji dollar. Had we been forced to devaluate, Fijians would be paying much higher prices today for everything.”

Sayed-Khaiyum says liquidity levels in the financial environment stands at around $2 billion.

He says this supports a low-interest environment.

The Minister for the Economy also says inflation has been increasing recently with the rise in international prices and freight costs.

He says the debt-to-DGP ratio rose from 53.3 percent in 2006 to 56.2 percent in 2010 before beginning a steady decline towards 43.5 percent in the 2016-2017 financial year.

The Minister says following TC Winston and many other natural disasters Fiji suffered, the government increased its borrowing out of necessity to build back better.

He says the debt to GDP ratio now sits at over 80 percent.

He says the alternative of not borrowing to support the economy in the last 20 months, that is during the COVID period, would have been catastrophic and the consequences would be hard for an average Fijian.

Sayed-Khaiyum says it is clear the government’s stand to take debt from multilateral partners was economically sound and necessary.

He says this has allowed the government to announce a revised budget that takes on the affordable living challenge and creates opportunities for all Fijians.