24 July, 2021, 1:05 pm
I am sure you have heard and read many views on the 2021/2022 national Budget presented by the Minister for Finance last Friday. Some views are full of praise. Some are realistic.
I have in the course of the past four days, issued daily analysis of the budget. On Thursday, I presented a full analysis. I would like to think that my views are technically realistic. I have backed up my assessment with facts and figures.
I am not a doomsayer. Much of what I have predicted has come to pass. I have been there, done that, in real life. I was the Governor of the Reserve Bank of Fiji.
I have prepared many nation- al budgets as the permanent secretary for Finance.
I have a Master’s degree in economics and Bachelor’s degree in economics and ac- counting. I have rescued the country from two crises in 2006 and 2000.
I think I know what I am talking about. I have watched with amazement and dismay at the manner this Minister for the Economy has man- aged our economy and finance.
In my expert assessment, the budgets before the pandemic were riddled with misjudgments. I could see our financial and economic disasters as far back as 2009. It took a pandemic for everyone to see what I was seeing.
I am appalled at the past three budgets after the pandemic, two in 2020 and this one for 2021/2022. My major worry was that these budgets were not ad- dressing the root causes of our problems.
This Government refuses to concede the multiple crises that we are facing. They dance around these crises with many “feel good” gimmicks which make the holes deeper and deeper, and the solutions harder and harder.
Tragically for Fiji, this budget commits the same mistakes. It does not con- cede the realities that we are facing – a) a health crisis which is out of control; b) a deepening economic crisis; and c) a financial situation which is in tatters. We can- not begin to find solutions if we do not concede these starting points.
Health crisis is out of control Everyone knows that the health crisis is out of control. Our positivity rate is more than five times the WHO benchmark. Deaths are rapidly rising. There were 22 deaths the other day including two pregnant mothers.
It is heart wrenching. Based on the death mortality rate, I expect that 180 more people may die before the herd immunisation level is reached.
What will we tell the people that have lost and will lose loved ones? Do we tell them, sorry, the Government made the wrong call? Our health system is crumbling.
It is so sickening to see sick people living in shocking hospital conditions and of families still looking for the body of their loved ones.
The budget has only one silver bullet to solve the health crisis, which is immunisation. In the very likely event that we miss this target, our economic and social woes will be multiplied many times over.
Many more people will die. This budget only gave $9 million more to the Minis- try of Health. This is tragic. If we are serious about stop- ping the virus, we should have reassigned the money allocated to many things that do not matter, to this priority.
This budget, like many past budgets, has the wrong priorities. Economic disaster The budget does not con- cede that we have a serious economic crisis on our hands. Next year, the economy would have declined for three years in a row by a cumulative 25 per cent. Please do not blame the COVID-19 virus.
The bust of the Bainimarama Boom was definitely coming, virus or no virus. The government’s own macroeconomic indicators confirm our economic woes. The current account of the balance of payments has risen to 13 per cent of GDP when 4 per cent was the norm.
Our foreign reserves are being propped up by over- seas borrowing, aid flows and sale of assets. I estimate about 40 per cent of our peo- ple are surviving below the poverty line. The income of one third of the population has been reduced or completely lost.
We have lost $3 billion in national income in two years. The social impact of this crisis is huge. Sadly, the 2022 budget failed to ad- dress or even mention any of these.
Instead, the minister talked a lot about stability and sustainability. This is denial at its very best. Financial disaster Believe me, we are in a big fi nancial mess, the root of which goes back to the spending spree of this Government since 2006.
The Minister for the Economy thinks that money grows on trees. I wish it did. However, what dismays me is that the Government has done nothing to reform its expenses. It carries on as if nothing is wrong. The ministers drive around in fl ash tinted cars with escorts and security guards.
They only cut their salaries by 15 per cent when it should be 50 per cent. The Prime Minister still retains his fund of $2 million at such a time as this.
QORVIS, the international public relations company, is still being funded by taxpayers to put out political spins. Instead, of reducing wastages, this budget cut social welfare programs and under resourced the Ministry of Health.
Government has decided to apply zero-based budgeting, but it has put it off to next year. The medium term strategic plan mentioned expenditure reforms, but Government has deferred them to future years.
It is absolutely urgent that we take those reforms now. This inaction again reflects the lack of commitment by this Government to solve the root causes of our financial mess.
This budget has increased the rate of borrowing. It could have reduced it if they have reformed expenses and introduced new revenue measures to be borne by high income earners. But no, the minister decided to woo the voters by doing many little things that do not solve the problems that we face.
The only policy I know that this Government has applied successfully in the private sector since 2006 is the divide and rule policy. Therefore, the solution is simple.
The most effective way to restore private sector growth and provide more jobs is for the Government to stop its political intervention in the commercial businesses of the private sector.
The best measure of what the Government is doing in the private sector is Fiji’s ranking in the World Bank’s “Ease of Doing Business”.
Fiji’s ranking under this index has worsened terribly from 52nd in 2006 to 102nd last year.
On the sub-components of the index of “get- ting credit” and “starting a business”, only 20 countries out of 180 are worse than Fiji. There is nothing in the budget that will raise the low level of investor confidence.
The incentives to investors in the budget will not be effective. To raise this confidence, Government must stop interfering in businesses and start to ad- dress the declining ratings of the World Bank. Conditional support The unemployment sup- port in the budget is welcomed.
But by making it conditional on vaccination is unethical and unjust.
The Government must remember that it is the people’s money that they are distributing.
Therefore, it is unjust to make vaccination a condition of receiving help when the taxpayers are suffering. There are many other ways of encouraging people to vaccinate. At a time like this, the decision by the Minister for the Economy to make the handout condi- tional refl ects the disregard that this Government has for the people’s welfare.
The unemployment assistance is also inadequate, estimated at less than $2 a day which is below the poverty line. There are numerous is- sues in the budget that lack proper rationale. My favourite is the waiver of traffic fines including speeding.
Why on earth would a government reward the people to break the law and endanger lives? This is a Mickey Mouse gimmick. Minister for the Economy must go. When we do not have the money, we must focus on what matters.
Unfortunately, the Minister for the Economy has played his usual game of dazzling the people with things that do not matter too much. This is unacceptable. It has gone on for too long.
I believe that the Minister for the Economy must go before he completely destroys our country.
SAVENACA NARUBE is the leader of Unity Fiji, former governor of the Reserve Bank of Fiji and permanent secretary for Finance.
The views expressed in this article are his and not necessarily shared by this newspaper.