The Standard and Poor’s revised Fiji Outlook states that revenues will likely remain weak in fiscal 2021 as the borders remain closed for at least part of the year, before recovering in 2022 and beyond.
The COVID-19 pandemic upends our previous expectations that the government would begin a process of budget consolidation, after posting moderate deficits of three to four percent of GDP in fiscal years 2018 to 2019.
These deficits partly reflect substantial infrastructure investment to address shortcomings in basic services and the recovery from
Tropical Cyclone Winston.
S and P forecasts that the stock of net general government debt will rise to about 57 percent of GDP next year before stabilizing at around 55percent in the outer years as GDP recovers.
As a result of the growing debt, the government’s interest burden will rise to around 14 to 15 percent of fiscal revenues during the next two years.
However, average borrowing costs will likely decline over time as Fiji accesses a growing pool of lower-cost lending from the ADB, World Bank Group, including the International Development Association, and bilateral partners such as the governments of Australia, Japan, and New Zealand.