24 March, 2018, 12:00 am
THE Fijian Government is managing debts much better, says Attorney-General and Minister for Economy, Aiyaz Sayed-Khaiyum.
He made these comments while responding to a question asked by a student, as to where the Fijian Government was getting the money to pay its debts, at the 2018-2019 National Budget consultation with school students at Vashist Muni College in Navua on Thursday.
Mr Sayed-Khaiyum said the International Monetary Fund (IMF) highlighted that Fiji’s debt situation was indicative of the authority’s commitment to fiscal discipline and sustainability.
“If we are borrowing to build things, like building footpaths in Navua, streetlights, water systems, building four-lane roads in Nasinu/Nausori and in Nadi. Building hospitals and schools, this a good way to spend debts,” Mr Sayed-Khaiyum said.
“There are two ways in measuring debts. One way is the percentage of the gross domestic product (GDP). Basically, it is the value of products in the country. There is a percentage of the value of the wealth of debt has come down from 53-56 per cent to 45.6 per cent. We are doing well in this perspective because Fiji’s economy is also growing.
“Let me give you a simple example, assuming Fiji’s GDP is $100, you go out and borrow $20. You say your debt to GDP ratio is 20 per cent, then you decide to go out and borrow $50 but your GDP has gone up to $500. Even though we have now borrowed $50 instead of $20, but because the GDP has gone up to $500, your debt to GDP ratio is 10 per cent. Before even though you borrowed $20 and GDP was $100, it was 20 per cent. Now you have borrowed more.”
He said all governments in the world borrowed money and the Fijian Government had to pay debts of the previous governments before them.
“So when the current Government came in, we also borrowed money, we paid the debts of the Qarase government, the Chaudhry and Rabuka governments,” he said.
“So when we were appointed in 2006, the debt already was $2.8 billion from the previous government. Today the debt is sitting at $F4.6b.
“The debt has gone up, the question that should be asked is where the debt going to? What is the money borrowed used for?”
He said the Government was carrying out what was called operating savings.
“Every year the amount of money we collect, the amount of money we spend for operating for service. Capital costs are spending money to build things. So, if you take the amount of money we collect every year, revenue and minus that from our operating costs, we have our savings. We use these savings to build things,” he said.