Biman Prasad has gone cap-in-hand to the World Bank to obtain an extra $214.6 million in “budget support” to pay for the initiatives he will unveil in Friday’s budget, including an increase in the national wage and pay rises for civil servants.
Funny, isn’t it, that in the fancy wording of the announcement, there is no mention that this is an extra loan to add to Fiji’s growing mountain of debt – more than $10-billion and counting. All of which means that whatever pay rises will granted on Friday are again on the never-never. They are being paid for by borrowing the money, not earning it.
The whole nation is on the international financial drip. But there’s never a word from our political leaders about “restraint” or the need to tighten our belts and live within their means. Each year the government just goes and increases its borrowings.
No matter how much the announcement of putting out our hand for another loan is sugar-coated with talk about “investments” and “reforms”, the nation is spending more than it earns and today’s pay rise is tomorrow’s debt burden for our young people.
That’s just the reality of a shrinking tax base as tens of thousands of Fijians give up on their country of birth and head for the exits. But what is truly unforgivable is the lack of leadership shown by our politicians in grabbing more of the national cake for themselves and setting off a wages stampede.
The increases in MPs salaries and allowances are now being matched by pay rise demands across the economy. There was a clear opportunity for politicians to take the lead, tighten their own belts and set an example of responsibility for everyone else. But instead we now have wage increases that will push up inflation and reduce the spending power of the most vulnerable in Fiji.
Biman Prasad can sugarcoat the announcement of today’s new loan to help pay for Friday’s budget as much as he likes. But there will be a bitter pill to swallow for every Fijian down the track.
Biman knows it, which is why he opposed Lynda Tabuya’s emoluments package in the first place. But he was howled down by the fat cats of the parliament and our children will ultimately pay the price.
The Coalition promised a more responsible approach to the free spending of FijiFirst. Yet, sadly, as with everything else, the more things change, the more they stay the same.
UPDATE WEDNESDAY:
Is this a first? The Governor of the Reserve Bank, Ariff Ali, issues warnings about the precarious state of the economy virtually on the eve of the budget.
Does it reflect alarm about the possibility of excessive spending? Or is it a warning to the elements of the Coalition and the community who think money grows on trees to reduce their budget expectations?
Either way, it makes for sobering reading.
Yet none of this in today’s Fiji Times – the Coalition’s propaganda rag – where the meke of government spin never stops.
The FT trumpets “Political will to bring debt down” on its front page and buries the new loan and increased debt at the bottom of page 13.
Is it any wonder the country thinks there isn’t an economic problem and everyone deserves a pay rise?
And then the real news after the Coalition spin.
The original announcements from Tuesday:
Rajjv Sharma says
Don’t jump the gun but wait for the exact details in Fridays budget and then you can slice, dice and analyse.
Graham Davis says
Don’t be ridiculous. This is an article about yet another World Bank loan to prop up a govt and a nation that is sliding further and further into debt. No need to wait for anything.
Rajiv Sharma says
If anyone believes that the country can provide all the investments needed for infrastructure etc. without any borrowing then they are not living in reality.
The issue is about debt management and how the loans are invested to ensure that the economy grows through these investments that will provide jobs attract investments and increase living standards.if that can be achieved then it’s a good thing but if the loans do not deliver on growth then yes it’s just borrow and spend like the yesteryears.
That is why you have to wait for the budget on Friday to see what the projections are and if they are realistic and if the loans are justified.
Remember Aiyaz had to sell EFL shares to reduce the budget deficit by $400M and that was irresponsible.
Just a blanket statement that debt is going up to prop up a nation and Government is what’s ridiculous.
You always have a tendency to do that.
Graham Davis says
And you have a knee-jerk tendency to leap to the defence of the Coalition no matter what outrage they allow. Your silence on Lynda Tabuya and Siromi Turaga is deafening. But if it involves your precious NFP, there is an excuse every time.
Re infrastructure development. They can’t even fix the CWM. They can’t keep the water and power on. They can’t even keep a naval patrol boat gifted to them afloat. All they can do is borrow and spend.
Utter chaos. But, yes, you’ll be jumping on that description. What a joke.
Listen mada sometimes, dint always dedend your argument! says
You don’t seem to want to listen to any other view point but yours. Any dissent, and you’re ready to pounce like an angry lion!
Graham Davis says
Yes, guilty, Your Honour. I am a very angry lion when another $200-million dollars is added to the $10-billion debt and MPs spend $8.1-million feathering their own nests.
Rajjv Sharma says
You must be really blind GD, go and look back at my comments on Tabuya and Siromi and you will see that I have not spared the two and have not been silent on them. You need to be factual my friend.
You always miss my point , I referred to debt management and explained that if the debt is deployed to be productive and actually grows the economy then it’s a good thing.
I have run businesses and have borrowed money to finance expansion and make acquisitions and have grown the top line and the bottom line where the debt was not only used to grow and expand the business but increase the margins. Same principle applies to Government. You have never ran a business and created employment so you won’t understand , you are just a key board warrior ready to pounce on anything without sometime doing some background research and waiting for more information to analyze.
Do you really think that CWM can be fixed , water and other infrastructure can be improved within existing operating budget? These things need CAPEX my friend and CAPEX comes from borrowing and as long as these CAPEX are used to increase productivity and grow the economy then the debt is being properly managed, the debt to GDP is within the limits and the Government has the means to service the debt as long as growth target are being achieved.
Graham Davis says
I am “just a keyboard warrior” and “never ran a business and created employment so won’t understand”. I understand alright. My bullshit detector – refined over half a century in journalism – sometimes makes mistakes, such as trusting Biman Prasad to uphold the rights of Fiji’s minorities. But with you, it has been beeping steadily since you first appeared in these columns and it has just gone off the scale.
If you think the Fijian economy is being managed properly, good for you. That’s your opinion and you’re entitled to it. Just as people are entitled to be ignorant. But I don’t need to be a self-proclaimed expert like you to know that politicians who give themselves massive pay increases and trigger a wage stampede in the rest of the economy have set the nation on a course for disaster.
One of us will eventually be proved right. I hope – for the sake of everyone – that it’s you. But for some reason, my bullshit detector gets louder the more you double down on your “expert” narrative that we are in good hands with the Professor and have nothing to worry about. Funny that.
Justice says
Spot on Graham. Some beggar Biman’s fans are choosers and beggars can never be choosers.
Graham, you missed potted roads that are in a dire state of repairs.
Bali says
Rajiv bhai
Not favoring anyone here
There is a word in government system
MISAPPROPRIATION
ROTFI’s Patriot says
@Rajiv, wasn’t the Nutty Professor’s promise to bring the debt down from $10bn!!! But alas, his begging bowl is even bigger than his mouth.
Isolating ASK’s budget financing during COVID as a source of debt is just ignorant. The sale of EFL shares was included in the budget for at least 3 fiscal years before it actually executed.
Unlike Rabuka’s sale of ATH to FNPF to salvage NBF, this sale was planned way in advance. And the current government must follow the same blueprint to get the SOEs off its teats. WAF, FDB, FSC (Fiji Sugar), FSC (Fiji Sports), the municipal councils to name a few need to be moved away from the government budget.
The taxpayers are funding fat cats sitting in provincial councils; first by way of their taxes, second by way of their solis.
There is an oversized government which has at least 29 of everything. All ministerial and assistant ministerial positions need to be reviewed.
A zero-based budget with the aim of achieving a balanced budget should be the government’s blueprint. Government has failed to deliver on their targeted capital projects, and abysmally at that. Where’s the future benefits of the debt taken and tax increases!!
ASK is history. Focus on the current stupidity and call it out for what it is. Don’t be Richard Naidu.
Rajiv Sharma says
The sale of EFL shares was a gimmick to just on paper to reduce the budget deficit when he actually ran huge deficits before the sale of EFL shares cushioned the deficit.
I agree that a balanced budget should always be the goal but in Fijis case it needs to borrow to finance much needed expenditures on failing infrastructure and a balance budget won’t achieve that. These borrowing needs to be well managed and the investments need to grow the economy and increase productivity and if these two things can be achieved then the country will be in good shape.
Think DEBT MANAGEMENT
Where do you think tbd money will come from if tax intake is not there tho support Governments programs?
Aiyakonomics was actually bad fiscal management where he really reduced tax intake and boosted expenditure wot no plan to pay for the door hole he created .
You need to go back to history to learn from past mistakes so as to not repeat the same mistake.
RM Rakesh says
You nailed it, Graham!
FijiFutures says
Budgets are not merely about spending money, whether it is one’s own or borrowed funds. It is disappointing that lenders do not hold Fiji accountable. Scrutiny of fund usage is crucial for shaping our nation. Short-term fixes, like patching up holes in Fiji’s roads, incur significant long-term costs. The nation’s culture is entrenched in the ‘kerekere’ mentality, leaving us perpetually dependent on external handouts, which often come with strings attached.
A government must be accountable, and the people must ensure it remains so. Budgets should reflect realistic plans aimed at productivity, progress, self-sustainability, and resilience. Many are keenly watching how our professor and his team will navigate Fiji out of its current economic challenges. High-quality, relevant education (actually the full education ecosystem) must be part of the plan. Exercising frugality and wisdom in prioritizing national health improvements is essential.
We implore the professor to demonstrate his expertise and responsiveness. His le and deliver the much-anticipated strategic direction. His academic and political prowess will be put to the test, and we eagerly await the results through his statement on Friday on how he defines himself and how he defines the future of the country!
The ability of finance ministers to successfully lead their nations forward is a testament to their financial acumen, courage, and integrity. They must make difficult decisions, often in the face of significant opposition, and communicate their vision transparently to maintain public trust. Their successes are often marked by the effective implementation of policies that promote long-term economic stability and growth.
Some learnings – Manmohan Singh: Singh’s bold economic liberalization policies in the early 1990s were instrumental in transforming India’s economy. His honesty about the dire state of the economy and fearless implementation of market-friendly reforms set India on a path to rapid growth
Gordon Brown – “Stability is necessary for sustained growth, and it is a necessary condition for our ambitions in social justice and for a strong and sustainable economy.”
Paul Keating – “In the end, the greatest benefit of economic reform is to enhance our capacity to generate growth, employment, and wealth.”
Winston Churchill – “I have nothing to offer but blood, toil, tears, and sweat.”
Good Luck professor, for hopefully producing a watershed budget!
Pundit Ji says
Almost every country takes loan for it’s development
Fiji has been borrowing for last 16 years, both past and current government to run it’s operations
So in other words Tom has borrowed to build his house and Tomasi has borrowed to celebrate Ratu Sukuna and Girmit day
Tom has a permanent job and Tomasi is a casual laborer
Rest you can work out for what has happened in past 16 years if your road conditions are bad or hospitals are in pathetic conditions
Jalil says
What an explanation
Nailed it
Awesome and easy to understand
Feasting, merry making and pocketing borrowed money
Isa Tomasi
Oz says
Fiji has sold her soul to China. This huge debt burden that our leaders have placed Fiji under is of no coincidence. China will step in somewhere down the track and bail Fiji out with everything and everyone under CCP control. How dumb can these cronies get? Time to abandon the ship and head off over the waters to our neighbors. Hasta la vista minista
Globalist says
Don’t be ridiculous, the World Bank is a foreign policy tool of the US, not China.
Slacker says
In the next election if the coalition wins and is back in power, then I wonder how much Fiji’s debt will be? What would happen if Fiji fails to pay the debt?
Abu Jamin says
Living on future income today is never wise. The wall may come sooner than anticipated, especially when lendors never have to consider Fiji’s ability to pay but opting on other leverages and equities.
More loan for operational expenditure says
The media need to be doing their job in asking Minister Biman Prasad what the term of this loan is. Duration, interest rate etc. And they ought to be calling it a LOAN. Which is what it is. Budget support is not a term in public finance management.
Looks like the $214.6M is going directly to operational expenditure in the coming Budget. More loan, more interest, more repayment. Fiji is caught in the borrowing vicious cycle. And the cycle is spinning faster and faster.
With the shrinking revenue base, this is a double whammy. Deficits to be funded by more borrowings.
It appears that Fiji is quickly approaching THE END.
Ratu Imperial Vulagi says
You’ve nailed it. It’s nothing but a pyramid scheme. A full on pyramid scheme but then the vast majority wouldn’t know what that is all about and would they care? It’s called borrowing from Peter to pay Paul or if you wish, from Peceli to pay Panapasa.
So long as it ends up benefiting individuals in some form or another, that’s all that matters. Fiscal restraint is not in the lingo and as for the bossalevu, the PM, no financial knowledge and no responsibility taken. Remember his last stint in charge of the national bank?
The economy is for the Vulagi Finance Minister, and his knowledge or lack there of is very evident in 2 years in the role. If it doesn’t work out, just blame the last lot for everything. Set !
A big Piggy Bank & telling some Porkies! says
Budget Support must have been conjured up by some good PR people!
During covid these “Budget Support” receipts from Aust and NZ were gifted I recall.
This year’s Budget Support, however it is disguised, is a LOAN!
A loan has to be repaid!! With interest. Unless otherwise disclosed.
Idiots everywhere says
Fiji is full of idiots. From the politicians to all those who elected them. Idiots are eveywhere, so Fijians do not have a choice except to elect who they think is the best of the idiots. But I think they end up electing the worst of the idiots.
It is sad but Fiji is stuck. Nothing will ever improve in Fiji so all those who are looking to a better Fiji better will remain disappointed before they die.
It is simple, if you elect an idiot from 37 years ago who has done f*ck all for you and the country in that time, why would you mae him PM half a lifetime later?
Answer: because Fiji is full of idiots. And then they all complain – it is f*cking ridiculous. Yes I am talking about to you and about you.
Disgusted says
This is ASK’s “smart borrowing all over again. Prasad is the biggest hypocrite and a disgrace of a man daring to call himself an economist.
When in Opposition he castigated his opposite nbr abt the FFP govt’s massive accumulation of debt. 17-months in office and under his watch the coalition govt has added with this latest one, more than $1bn in public debt raising the total national debt from 10 to $11bn. Meanwhile, Coalition Ministers are jetting around the world in air conditioned splendour while Biman refuses to act on advice to cut govt recurrent spending. .Biman’s legacy will be locking Fiji into another girmit where we and future generations are enslaved to the IMF and World Bank.
Fiji Watcher says
The Fiji Reserve Bank Economic Review for May indicates that the Economy of Fiji is not growing and inflation remains high at 7.1%.
See: https://www.rbf.gov.fj/category/economic-reviews/
Wages increases without an increase in productivity will further damage the Fiji position. The flight of people out of Fiji is already affecting economic activity and adding to the problem.
‘Budget Support’ is a temporary fix for the Government and will not rectify the policy decisions of the current Government who continue with idiot policies such as the ‘vulagi’ mantra which is fueling the flight of expertise, experience and knowledge from Fiji.
The debt will grow again as will the operating cost of Government the question is how much?
Fred says
I don’t mind borrowing to stimulate the economy provided the terms are good. It’s necessary and normal practice.
The problems stem from decisions with the tax system namely:
1. raising VAT to burden the poorest and at the same time
2. giving a tax holiday for Fiji’s most successful extractive company that is removing Fiji’s most precious resource right under our noses.
There is a huge problem that you could not make up.
Right now: Ordinary Fijians don’t have access to water and we are suffering from plastic everywhere. Our government is making commitments to reduce plastic.
how can we possibly justify the unprecedented and incredibly stupid decision to give Fiji Water a tax holiday?
It is an effing joke and if this government wants to be taken seriously it should properly tax extractive industries, stop posing with their plastic water bottles in every meeting and get a grip.
Oh and as an aside treat all people born in Fiji equally.
But if civil society was serious it would really examine the decision to give a tax holiday.
Amos says
For the world, so far this year 65 million have been born and only 29 million have died. For years the birth rate has been twice the death rate, accelerating the consumption and exhaustion of non-renewables. Thus we are daily urged to reduce our carbon footprint, cut down oil use to avoid increasingly extreme hurricanes. Fiji has that challenge amid massive debt. It is an interesting challenging time that needs brilliant leadership to navigate.
World headliners Fiji says
Quote from the Vijay Narayan article second paragraph.
The credit financing is from the World Banks’ fund for the “World’s Most In Need Countries”.
Congratulations and well done Fiji!
Welcome to West Africa in the South Pacific.
And shortly hopefull Olympic World Champion gold medallists in rugby 7s.
But let’s not mix sports and politics or economy…in case we are reminded how some rugby stars earning big bucks overseas have squandered their millions in earnings and are destitute a few years after their careers are over. Reflects the mismanagement at individual and govt level.
Idiots Everywhere says
Richard Naidu wants to privatise WAF so that the people will be charged a higher price for a basic essential of life. This while he gives a tax break to billionaires who sell the best water in the world from Fiji.
Is this guy a Dick Naidu or is he just a plain Dick Head?
And then all the people of Fiji wonder why they are where they all are!!!!
Like I have said before, there are idiots from the top to the bottom in Fiji. They are simply not aware they are all idiots. But one thing is for sure they are all proud idiots but they are simply unaware and oblivious that they are all idiots. And therein lies the fundamental problem in Fiji.
Eroni says
This is great news as this finance package will enable the Minister to implement the cornerstone of his policy – reducing the price of lamb chops. Anything left over can implement his most exciting new policy initiative – reduce the price of chicken. After the budget activity will be stimulated nationally with lovo pits and bbqs as well as more stimulating our valuable brewery workers. This plan cannot fail and I have to go in my 4×4 now to get soft drinks to wash down this mighty budget success. Stop complaining!
Raju says
With Australia , New Zealand America being hit by recession and economic down turn, remittance to Fiji has nose dived
Less money is sent to people of Fiji by their families and friends
Cost of living has increased
Worst is the increased mortgage rates by banks
Rents has gone up
Prices of goods have been high
Extra hours and shifts workers were doing is not available
anymore, hence there isn’t much to spare and send
This is affecting the cash flow in Fiji
Government needs to wake up and play it’s card right,otherwise it will sink further in the shi”:thole created in last 16 years
Vote for Change says
The coalitions budget tactic:
We plan to borrow enough money to get us completely out of debt……….. and fill our pockets.
They Never Learn says
Criticizing the first 1987 coup and concerned about its adverse impact on the people, politician and former army officer, the late Ratu William Toganivalu, counselled Rambo to “go and read economics at LSE” – London School of Economics.
And every Sunday, most of our current leaders worship. Only wished they would learn the basic lesson on economics from the miraculous feeding of the multitude from a lad’s 5 barley loaves and 2 small fishes:
Gather up the fragments that remain, that NOTHING BE LOST.
Hopefully, “tighten up and stop the wastage” of scarce resources will be a key commitment of the Coalition on Friday.
Sega-na-lega says
Ironic aye that we’ve not been impacted by COVID, severance tropical cyclone or any other significant catastrophe yet borrowings galore contrary to the rant before!
And rather than prioritise investing in and fixing health care and easing burden of the vulnerable, these lot are busy filling their pockets!
Borrowing for opex is never the solution.
Those defending it are plain old STUPID! Full stop!
School dropout Economics says
The fact of the matter is:
At some stage we need to earn more than what is spent (Surplus Budget), or to at least be even (Balanced Budget).
And when we have to borrow – that borrowing has to give a payback that leads to the above reality of surplus or break even.
Otherwise borrowing is folly….like buying a big TV on credit but not having the income to pay the power bill to watch it.
When good debt is taken on and is mismanaged to become a bad type of debt ie borrowing that does not lead to a “profit” it is a worse situation than not having borrowed – having to pay for white elephants.
Maynard Keynes says
Not true. Read up on yr macro economics. Govt is not like a household or a business. They are money users, govt is a money issuer therefore it has to run a deficit budget in order that non govt sector is in positive balance. If govt runs a surplus the private sector, meaning you and I and private businesses, will be in negative balance because govt takes more out from the private sector than it puts in. This leads to a recession.
In the US, for example, where there is good data, every time govt ran a surplus budget which was not often, it was followed by a recession.
There is a lot of ignorance out there. There are several ways govt can spend without creating debt but this govt is too stupid or in the pocket of the big boys to want to do it. In the end the people suffer.
Practical Economist says
I thought someone may bring this up, that Govt is different to Households. And repercussions of govt deficit vs surplus and so forth.
Well having being awed by economic professors in younger days, now with experience of life in the real world, I don’t care a hoot about what professors think and preach! Well as a general stance. I don’t rule out some slight usefulness of academics, but they are generally over rated and emperor’s without clothes.
This platform is not the place to give justice to countering such aspects of Keynesian economics as has been brought up. But if you sift away all the chaff and fancy economic terminology and keep things simple, it can become clearer.
On a different note: It is pleasing to see such educated commentary, economic dissection and analysis that is coming up in this blog site…people are showing interest and have the temerity and nous to challenge our leaders. Rather than living in ignorance of the country’s leadership strategic direction or lack of, or not bothering to engage in such important matters as the governance of the country you live in and the impacts on individual and the collective of good and bad decisions.
Maynard Keynes (Sir) says
Practical Economist, thank you for acknowledging that this is not the place to engage in lengthy economic argument. The point is there are other, and in my view, more accurate explanations than those being put forward by Biman and Richie Naidu abt the debt and the state of the economy. Case in point the Governor of the Reserve Bank this week put out a statement on behalf of the Fiscal Policy Committee that is different from what BP has been saying. But tmrw, Friday is Budget Day, there’ll be a lot more opportunity to offer our alternative perspectives in the coming days and weeks.
PS. I wish BP and Richie would read my works. They were the reason I was acknowledged as the leading economist of my era.
Rohit Sharma says
Fiji didn’t have a good Finance Minister in last 20 years
The last one was a Lawyer by profession but never was in practice
Neither I heard of him until 2006 coup,only heard his dad’s name somewhere
I remember seeing him briefly at Orielys bar in Suva one Friday evening
I was surprised to see a Indian looking guy in sulu in a pub
When I saw his pictures appear in news papers almost everyday after 2007
I realized it was him
Apart from Finance minister ,he was Minister of other half a dozen ministry’s
Minister of everything master of none
He had very basic knowledge of accounting which most of us know
He didn’t know anything about how value of goods and services were
He paid millions to his mates for overlooking projects
How do you pay someone 20 million dollars for project management of a 100 million dollar project
That’s 20 percent of a project cost
He was good at talking and people thought his smart
That’s what conman are good at
The current Minister of Finance has knowledge only by books and mostly economics
He read lot of books on economics but no practical experience
With what we have seen in last year and half ,current Finance Minister appears to be a shopkeeper at a cooperative store
I remember one week they have kerosene in stock and other week there will be none
There will be bread but no butter
Half the shelves would be empty in the shop
If relatives come and kerekere, he would give away for free(Girmit celebration)or write on a piece of paper and next day that paper is hard to find
We all have seen what is happening in Fiji today
From bad to worse
Fiji needs a Finance Minister who has both academic and practical experience
Someone with a clean record and has climbed through the ranks
Someone who will have tight control of finances of Fiji
These 2 were not qualified for MF role
Freedom of speech says
From your writing it is clear that you are not too qualified or experienced to do anything either. But isn’t freedom of speech wonderful.
Dalal says
you are not too qualified
What does this mean
Qualified or Qualified but not too much Mr Freedom
Not sure who?
Rohit says
I am not a journalist Freedom
Neither have a proof reader,
but I can write much better than many members of parliament from previous government and current one
Axel C Mehling says
Re.: Your Grubsheet reports/emails …STOPPED ?
Not sure why we no longer receive your informative mails…?
Is there a ‘subscribe’ button ?
Thanks kindly, Vinaka!
Graham Davis says
I will investigate when I am well again. As you know, we had technical difficulties a couple of weeks back. My apologies.
Moti Lal says
It’s good you understood what was written Freedom of Speech
That’s how you know Rohit is not qualified or experienced