The International Monetary Fund (IMF) is forecasting Fiji’s public debt will decline very slowly to around 79 percent of GDP by the year 2029.

This is stated in IMF’s Article IV Staff Country Report released in Washington on Monday.

According to the fund, Fiji should continue to rebuild fiscal buffers through a gradual consolidation, improve the targeting of social spending and prioritise capital spending to support inclusive growth.

“The deficit reduction in the FY2024 is an important first step in reversing the public debt trajectory.

“Nevertheless, staff analysis shows that further fiscal consolidation is needed to put debt on a clearly downward trajectory over the medium-term.

“Staff’s baseline projections – based on announced policies, rather than announced targets – projects that the overall fiscal deficit would remain above 4 percent of GDP over the medium-term, with public debt declining very slowly to around 79 percent of GDP in FY2029.”

The IMF further stated that rebuilding fiscal buffers over the medium term should be a top priority given Fiji’s vulnerability to shocks.

“The risk of debt distress is assessed as moderate, thanks to favourable terms and maturities; nevertheless, the fiscal space to absorb future shocks while minimizing social costs – as done during the pandemic – would remain limited.’

“The authorities are rightly targeting additional fiscal consolidation (achieving a small primary surplus starting in FY2025), as reflected in their Medium-Term Fiscal Strategy (MTFS); however, additional concrete measures are needed to achieve this path, including its budgetary targets for FY2025.”

It opined that a more ambitious adjustment path than the MTFS can help rebuild fiscal buffer at a faster pace and enhance policy resilience.