Almost one in every five dollars of revenue that Government collects is now paid as interest to our lenders, of which about 70 per cent is local.
Deputy Prime Minister and Finance Minister Professor Biman Prasad painted a grim picture of Fiji’s finances during his ministerial statement in Parliament on Thursday.
He said while the interest on local debt was returned to the local economy, Government still had to find money to write the cheques.
He said Government debt stood at 85 per cent of gross domestic product or GDP.
“The Coalition Government is not the only one worried about it,” Prof Prasad said.
“Global institutions such as the World Bank and the International Monetary Fund are also urging us to deal with it.”
Prof Prasad said offshore debt also presented different challenges because of foreign currency volatility.
“So if Fiji’s currency falls against currencies like the US dollar, our debt automatically goes up and so do our interest payments.
“A lot of our debt is on variable interest rates.
“It is clear that the pressure is on interest rates to rise. So once again, we will have to find more money from government finances to meet rising interest costs.
“There is another line of debate emerging on our debt. This line is ‘stop worrying, although the debt is high, it doesn’t cost too much and the Government can meet the interest payments’.
“Yes, at the moment, the Government can do that. The Government is not going to default on its debt.”
He also said there were a number of unforeseen risks that Fiji would always face — economic shocks, a serious cyclone, or even an earthquake or tsunami.
