I am presenting the 2022 Alternative Unity Budget at a very dangerous time of our lives. Never before have we lived in great fear of contracting the deadly virus and even death. The daily cases are now close to 800. Deaths are rising fast. With our small population, the entire country is in danger of being destroyed by the virus.
The virus is out of control and more and more lives will be lost. The saddest part to me is that this loss of lives could have been avoided. I have said it and will say it again, our battle is not so much against the virus, but against the ego and pride of this Government.
2022 alternative Unity budget
Inspired by the spirit of togetherness and what I believe is the will of God, the 2022 Alternative Unity Budget present to the country a credible blueprint to help us in this crisis.
If a government puts people first, then it must listen to the people.
The theme of our 2022 Alternative Unity Budget is “Putting People First”—not profits, not just cohorts, not just close friends, not just one race, but all the people of all races, of all religion, and at all locations.
Budgeting is about financial resources. Unfortunately, financial resources are what this Government does not have. When we do not have the money, we need to be innovative and focus sharply on a few immediate priorities.
Unity budget pillars
The 2022 Alternative Unity Budget rearranges our priorities. We need to bring to the fore the need to stop the virus and support livelihoods.
Our first pillar is therefore to stop the virus: We recognise clearly that this is a health crisis, and our first priority must be to stop the virus as quickly as possible. A prolonged economic crisis will harm everyone.
Our second pillar is to raise the assistance to the people. Sadly, the assistance that are being given by Government is tokenism. This budget raises the assistance to our people in cash and food to $600 million.
Our third pillar is to support resource-based industries and small businesses: Unity Fiji has been emphasising that we must look inward for the immediate solutions to the economy.
This 2022 Alternative Unity Budget provides $100 million to revive our resource-based sectors. At the same time, the budget allocates $100 million to help small businesses.
Our fourth pillar is to adequately resource our priorities in the first three pillars: Government is already facing a debt crisis and it is essential that its borrowing is moderated.
The 2021 Alternative Unity Budget will focus on reprioritising expenditure away from non-essential and wasteful spending to provide the adequate assistance to the people and stop the virus.
Our last pillar is to stabilise our fiscal position: Fiji is facing a financial crisis never before experienced in our history. We must prevent the country falling off the financial cliff which will make our suffering much worse.
The 2022 Alternative Unity Budget begins the long journey of stabilising government finance by halving the deficit from the level budgeted for this year.
Economic growth and projection
The economy declined by 2 per cent in 2019 and collapsed by a record 19 per cent last year. We can say goodbye to the Bula Bubble or to any bubble for that matter. We project the economy to decline again by 5 per cent this year. It will take seven years or more to get back to where we were in 2018.
We estimate that $3 billion has disappeared from the economy. We must put some of this money back into our pockets to revive demand which will benefit everyone, the people, the businesses, and the Government.
Government has made many poor judgements which have contributed to the precarious situation which we now face.
Eggs in one basket
The first poor judgement is putting all its eggs in one basket. If you look at the performance of sugar, timber, gold, and fishing in the budget documents, they are dismal.
There are other crops such as dalo and cassava which have higher yields than sugar cane which deserve support. This budget is providing $100 million of assistance to this important sector.
Low access to credit
The second mismanagement of this Government is its hypocritical stance on private sector development.
Fiji’s ranking in the Ease of Doing Business Index by the World Bank has plummeted from the top 50 in 2006 to 102nd last year.
Fiji’s ranking in getting credit has worsened from 79th in 2015 to 165th last year. Only twenty countries in the whole world are worse than us.
Surprisingly, interest rate spread is widening which implies that banks are protecting their bottom line when the entire country is suffering.
I am therefore calling on the Reserve Bank of Fiji to undertake a thorough study why Fiji is ranked poorly in accessing credit.
Private sector confidence is low not because of the COVID crisis only. It has been low for a long time because of the heavy handedness of Government in the private sector.
This divide and rule that Government has wielded in the private sector creates uncertainty and discourages investment.
This budget proposes to help the cashflow of businesses by releasing over $100 million of outstanding VAT returns.
We are also calling for more transparency in the tender process where the Minister is required to publish all exemptions from the rules of the tender process.
Fiscal mismanagement
The major weakness of this Government is that they think that money grows on trees. Government thought that spending was the solution to all our problems. They went on a spending spree.
To make it worse, the government spent most of the money in the wrong places. In addition, to make the budget looks better every year, Government inflated its revenue at the budget time.
This serious fiscal mismanagement have brought us to the mess that we are facing now.
This Alternative Unity Budget is correcting these fiscal mistakes by weeding out wastages, setting the right priorities and reducing the deficit.
Budget strategies
At this time, the country needs a steady pair of hands and an experienced leader to steer us carefully through these rough seas into calmer waters. Reducing expenditure because of our debt level is not smart. Giving away revenue when we are desperate for funds is not smart.
So, this budget proposes to do two things. First, Government to reallocate spending away from non-essential areas to the immediate priorities. Second, Government to reapply the savings to fund the priority areas.
We have identified saving of $1.1 billion, the details of which are in the Budget. Our messages are clear. We must share the burden fairly and take bold steps now to clean up expenditures.
Finally, we must address debt and the high risks it poses to our future. Fiji’s debt level has risen by over 400 percent since 2006. Debt payments make up over 60 per cent of our operating revenue and are already crowding out essential spending in health and education.
To add to our precarious debt position, government guarantees are rising rapidly.
The risks of these guarantees to our financial position are multiplied many times over in this crisis. If we add contingent liabilities to debt, the total debt liability rises to over 100 per cent of GDP.
The country is in a very precarious economic and financial position. Our work is cut out for us.
We have to start now. I believe that the 2022 Alternative Unity Budget has struck the right balance. We are putting people first.
At the same time, we are starting the process of healing our economy and restoring financial stability.
- SAVENACA NARUBE is the leader of Unity Fiji and former Governor of the Reserve Bank of Fiji. The views expressed are the author’s and not necessarily of this newspaper.
