Sayed-Khaiyum on borrowing

Attorney General Aiyaz Sayed-Khaiyum. Picture: SUPPLIED

Not borrowing and supporting the economy during the past 20 months would have led to a more severe economic decline, says acting Prime Minister and Economy Minister Aiyaz Sayed-Khaiyum.

He said this as he highlighted that Government secured more than $700 million in highly concessional finance “tagged to policy reforms with long lasting impact”. He said Fiji’s debt to GDP ratio would have been in a far worse position.

“This is apart from the devastating impact we would have seen on the socio-economic front,” he said.

Mr Sayed-Khaiyum said Fiji’s largest foreign exchange earner, tourism, brought in about $2 billion in foreign exchange earnings annually.

“With tourism earnings almost completely shut down for 18 months we ran a high risk of a large devaluation if the Government had not sourced the external debt and budget support from the multilateral and bilateral partners and secured the foreign investment in Energy Fiji Ltd.

“A devaluation in the middle of a crisis would have meant more uncertainty and would have made the crisis worse with many more severe socio-economic challenges.

“Government securing the external funds (borrowings, budget support and EFL divestment) not only supported foreign reserves but helped increase the liquidity in the domestic market which in turn reduced our interest costs on domestic borrowings.

“It also helped keep the interest rate environment low which is critical for economic recovery.”

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