Economy minister elaborates on Government debt

GOVERNMENT debt is what a lot of people don’t understand, says Attorney-General and Minister for Economy Aiyaz Sayed-Khaiyum during the 2018-2019 National Budget consultation for the private sector in Suva on Tuesday.

The Minister for Economy especially mentioned Mauritius whose nominal debt level was higher than Fiji’s at $US7.5 billion ($15.25b) but said it was good debt.

“But it’s good productive debt because it’s earning them revenue,” Mr Sayed-Khaiyum said.

Mr Sayed-Kaiyum briefly explained how Mauritius had also borrowed quite heavily and invested in building infrastructure to promote their health tourism.

On Fiji’s debt level he said the percentage of our debt to GDP had gone down because our economy had grown.

“In 2006 the debt accumulated was $2.8 billion, and the debt now sits at $4.6 billion, however as a percentage of GDP it has come down because our economy has grown; the value of our GDP is $10b,” Mr Sayed-Khaiyum said.

“Nominally the debt level has gone up; debt by its very nature in particular; it’s sovereign debt and it’s always referred to as inherited debt,” he said.

The A-G said when the Ratu Mara government was formed post-independence they also borrowed money from FNPF and almost all governments in the world borrowed money.

He said every single government borrowed money but also had to pay the debt of the previous governments because the debt was a Government debt; it was a sovereign debt.

“But thankfully no government has ever defaulted on any of its debt commitments even though it may have been incurred by the previous governments, which is a good thing because our credit ratings in that perspective is good,” he said.

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