Minister for Economy Aiyaz-Sayed-Khaiyum. [File Photo]

The Minister of Economy says reducing civil service salaries would have meant a loss of millions of dollars for the economy.

Aiyaz Sayed-Khaiyum made this remark while responding to the alternative budget provided by former Reserve Bank of Fiji Governor, Savenaca Narube.

While acknowledging Narube’s effort of providing an alternative budget, Sayed-Khaiyum says some of the suggestions made are not realistic given the current situation facing our people.

“Savenaca Narube said we should increase VAT to 12 percent, we should impose a 20 percent income tax surcharge, increase personal income tax, increase duty on motor vehicle and cut civil servant salaries. Yet they are holding their submission up as some kind of alternative to this budget. No country is raising taxes. When you don’t have the ability to pay tax why raise tax?”

The Economy Minister says despite the slowdown in economic activity in the private sector, civil servants need to continue providing essential services.

Even a 10 percent pay cut would have led to stopping the flow of at least $120m into the economy.

“The nurses have to work, the doctors have to work, and the medical assistants have to work. The police, the military, they all have to work and provide services. With this new announcement, the cuts we have made they need to become less bureaucratic and become more efficient so we need them. We are paying them and they’ll be the one, the key stakeholders to drive the impetus we’ve given to the private sector.”

The government has announced there will be no pay cuts for civil servants, however, salaries of all Government Permanent Secretaries and Chief Executive’s and Heads of Commissions and Independent Bodies will be cut by 10 percent.