PRESENTATION AT THE PLENARY SESSION
DEVELOPMENT COOPERATION WITH MICS
Mereseini Q. Waibuta
Ministry of Finance (Fiji)
10 March, 2014
In Seoul, Korea
1
Ministry of Finance
OUTLINE
• Fiji at a Glance
• Fiscal Developments
• Debt Management
• Medium Term Fiscal Strategy
• Relevance of MIC Classification
• Are MICs at risk
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Ministry of Finance
FIJI AT A GLANCE
• Total Area: 18, 274 sq km
• Population : 858, 038 (2012
Est)
• GDP Per Capita: $4, 728
(2012)
• Gini (2009): 42.8
• HDI (2013): 0.702
• Currency: FJD (USD 0.54 )
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FISCAL DEVELOPMENTS
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Ministry of Finance
FISCAL DEFICITS
% of GDP
Average deficits of around 2 percent of GDP since 2006!!
1.0
0.5
0.0
-1.0
-1.4
-2.0
-2.1
-3.0
-3.1
-3.4
-1.1
-1.9
-2.2
-2.6
-2.9
-3.3
-4.0
-4.1
-5.0
-5.3
-6.0
-5.8
-6.2
-7.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013r 2014b
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Ministry of Finance
GOVERNMENT REVENUE
$M
3000
• Buoyant performance in revenues with record high collections in 2013
2,721
• Growing economy and improved compliance efforts
2500
1,937
2000
2,053
1,804
1,401
1500
911
1000
500
0
2000
2002
2004
2006
Tax
2008
Non Tax
2010
2012
2014(B)
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Ministry of Finance
DIRECT TAX REVENUE
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Ministry of Finance
INDIRECT TAX REVENUE
$M
1800
1600
Significant increases in revenue from indirect taxes….rising
1,622
spending and strength of the economy
1,402
1400
1,230
1200
1,112
1000
800
661
600
420
456
699
713
781
792
805
877
760
515
400
200
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
(R) (B)
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Ministry of Finance
VAT PERFORMANCE
$M
900
846
Steady growth in VAT collections
800
734
700
664
619
600
473
500
378
400
300
200
252
404
415
466
496
453
403
269
194
100
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
(R) (B)
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Ministry of Finance
TRADE TAXES - CUSTOMS
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Ministry of Finance
Government Operating Savings 2000 - 2014
Government operating savings growing over the years and channeled
$M
towards CAPEX…
2,000
1,800
1,600
1,400
1,200
Operating
Revenue
1,000
Operating Expenditure
800
600
400
200
0
2000
2002
2004
2006
2008
2010
2012
2014(B)
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Ministry of Finance
GOVERNMENT EXPENDITURE
$M
3000
2,883
2500
2,327
2,014
2000
1,669
1,559
1,427
1500
1,252
1,322
1,032
1000
500
0
2000
2002
2004
2006
2008
2010
2012
2014(B)
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Ministry of Finance
CAPITAL OPERATING MIX
Quality of fiscal deficits improved with greater resources channeled to
capital expenditure
% of Exp
100
86
85
79
79
80
73
73
68
64
60
40
21
20
14
21
27
32
27
36
15
0
2007
2008
2009
Operating Expenditure
2010
2011
2012
2013 (R) 2014 (B)
Capital Expenditure
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Ministry of Finance
GROWING THE CAPITAL BUDGET
Move to higher capital mix to support the economy – Increases
in expenditure mostly towards CAPEX
Average 2001 - 2005
$1,202m
2013 Total Expenditure
$2,274m
Operating 68%
2014 Total Expenditure
$2,814m
Operating 64%
Operating 81%
Capital 19%
Capital 32%
Capital 36%
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INCREASE FUNDING FOR ROADS & JETTIES
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Ministry of Finance
INCREASE FUNDING FOR ELECTRICITY & WATER
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Ministry of Finance
INCREASE FUNDING FOR EDUCATION
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Ministry of Finance
INCREASE FUNDING FOR HEALTH
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Ministry of Finance
DEBT MANAGEMENT
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Ministry of Finance
GOVERNMENT DEBT
Debt levels stabilizing and expected to reduce further with
planned fiscal consolidation
%
$M
5,000
4,500
55.8
56.2
3,132
3,500
3,383
3,567
60
53.4
49.9
4,000
3,000
54.5
49.0
48.0
3,813
3,975
50
3,680
40
2,887
2,500
30
2,000
20
1,500
1,000
10
500
0
0
2008
2009
2010
TOTAL DEBT
2011
2012
DEBT AS % OF GDP
2013 (P)
2014 (B)
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Ministry of Finance
DEBT MIX
% of GDP
External debt will reduce after global bond repayment in 2016
60
50
9.2
7.8
4.8
3.9
3.5
7.2
3.2
8.9
12.4
8.2
13.0
5.3
40
14.5
5.6
30
20
34
39
42
45
45
44
46
43
42
46
46
41
38
35
10
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f
Domestic
External
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Ministry of Finance
DEBT FINANCING
• Borrowings in the domestic market
• High liquidity and low interest rate environment
• External bilateral loans from EXIM Bank China and Malaysia
• Global bond for financing in 2011
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Ministry of Finance
GOVERNMENT DEBT MANAGEMENT
• Reduction in fiscal deficits and expected economic growth positive
for reducing public debt
• Entire Borrowing channeled to capital budget
• Offshore sinking fund to settle US 250m global bond in 2016
• Currently US 140m (3% of GDP)
• This will reduce external debt composition
• Utilizing callable options to reduce debt servicing costs in current
low interest rate environment
• Reforms undertaken with partial divestment in entities to
minimize risks from contingent liabilities
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Ministry of Finance
MEDIUM TERM STRATEGY
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Ministry of Finance
FISCAL POLICY
• Focused on raising investment, economic growth while at the
same time ensuring fiscal sustainability
• Adequate resources is channeled towards priority sectors
(infrastructure development, education, health, agriculture,
social protection, renewable energy, etc)
• Encouraging private sector investment through a competitive
tax regime (new tax incentives and tax reduction in 2012)
• Containing deficit to ensure sustainable debt
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Ministry of Finance
FISCAL POLICY OBJECTIVES
Fiscal policy aims to achieve the following major socioeconomic objectives:
• Growth levels of 5 percent over the medium term
• Diversifying the economy for new sources of growth
• Promoting export-led growth and exploring opportunities for
import substitution
• Ensuring access to essential services such as proper
infrastructure , education, health, water, etc
• Creating additional opportunities for employment and
reducing poverty to improve the overall living standards
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Ministry of Finance
RELEVANCE OF MIC CLASSIFICATION
• Predominantly Income-based to differentiate
countries
• Does not consider the development
challenges that Fiji has to address e.g. Social
Protection Policies to help alleviate poverty
• Does not consider special needs esp our
vulnerability challenges as Small Island
Developing States e.g. CC & DRM
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ARE MICs AT RISK
• For Fiji, No as most of our loans are from
domestic sources
• We minimize exposure from global risks
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THANK YOU
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Ministry of Finance