Despite Fijians owning 52 per cent of shares in Fiji Airways Ltd, people do not have access to the company’s general reports, says Leader of Opposition Ratu Naiqama Lalabalavu.
Responding to a motion from Minister for Economy Aiyaz Sayed- Khaiyum for an increase of government guarantee to Fiji Airways borrowings both local and offshore, Ratu Naiqama said people needed a better feel of the medium and long term prospects for a company to appreciate the implications of an additional $106.4 million to the existing open guarantee of $4.55million.
“So if these two guarantees are approved by this august House then it means that our contingent liability will increase from $1.1 billion to $1.286 billion, which is an increase of approximately $186.4 million,” Ratu Naiqama said.
“This means our total contingent liability will be approximately 12 per cent of GDP.
“Yet despite the risks, Government continues to facilitate the additional guarantees to the two institutions.”
Yesterday, Government also sought Parliament’s approval to extend government guarantee from $170 million to $250 million for the 12-month period from March 1, 2021 to February 28, 2022 (guarantee period) for the Fiji Development Bank borrowings through the issuance of short and long-term bonds, promissory notes, term deposits, other short term borrowings and any Reserve Bank of Fiji financing facility; and that a guarantee fee of 0.075 per cent be applied on the cumulative utilised guarantee credit.
Ratu Naiqama said an International Monetary Fund report issued on October 7, 2021, clearly suggested that the economy would continue to contract with the accompanying rise in public debt to nearly 90 per cent of GDP.
“Contingent liabilities have also surged during the pandemic, and Government has extended guarantees to State enterprises.
“So, there is no room to manoeuvre or fiscal space to cushion against such risk sir.
“Instead, Government has decided to give up almost $200 million to drive consumption, the result of this guarantee will put more stress on our economy and will be very difficult to recover.”
In his right of reply Mr Khaiyum rubbished Ratu Naiqama’s claims saying, “No of course it has led to consumption, now, we’ve had so many people say to us, that it had been actually good for business, small shops”.
