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DEVELOPMENT COOPERATION WITH MICS

PRESENTATION AT THE PLENARY SESSION. DEVELOPMENT COOPERATION WITH MICS. Mereseini Q. Waibuta Ministry of Finance (Fiji) 10 March, 2014 In Seoul, Korea. Ministry of Finance. Fiji at a Glance Fiscal Developments Debt Management Medium Term Fiscal Strategy

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DEVELOPMENT COOPERATION WITH MICS

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  1. PRESENTATION AT THE PLENARY SESSION DEVELOPMENT COOPERATION WITH MICS Mereseini Q. Waibuta Ministry of Finance (Fiji) 10 March, 2014 In Seoul, Korea Ministry of Finance

  2. Fiji at a Glance • Fiscal Developments • Debt Management • Medium Term Fiscal Strategy • Relevance of MIC Classification • Are MICs at risk OUTLINE Ministry of Finance

  3. 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 )

  4. FISCAL DEVELOPMENTS Ministry of Finance

  5. FISCAL DEFICITS Ministry of Finance

  6. GOVERNMENT REVENUE Ministry of Finance

  7. DIRECT TAX REVENUE Ministry of Finance

  8. INDIRECT TAX REVENUE Ministry of Finance

  9. VAT PERFORMANCE Ministry of Finance

  10. TRADE TAXES - CUSTOMS Ministry of Finance

  11. Government Operating Savings 2000 - 2014 Ministry of Finance

  12. GOVERNMENT EXPENDITURE Ministry of Finance

  13. CAPITAL OPERATING MIX Ministry of Finance

  14. GROWING THE CAPITAL BUDGET Move to higher capital mix to support the economy – Increases in expenditure mostly towards CAPEX 2014 Total Expenditure 2013 Total Expenditure Average 2001 - 2005 $2,274m $2,814m $1,202m Operating 64% Operating 68% Operating 81% Capital 19% Capital 32% Capital 36%

  15. INCREASE FUNDING FOR ROADS & JETTIES Ministry of Finance

  16. INCREASE FUNDING FOR ELECTRICITY & WATER Ministry of Finance

  17. INCREASE FUNDING FOR EDUCATION Ministry of Finance

  18. INCREASE FUNDING FOR HEALTH Ministry of Finance

  19. DEBT MANAGEMENT Ministry of Finance

  20. GOVERNMENT DEBT Ministry of Finance

  21. External debt will reduce after global bond repayment in 2016 DEBT MIX Ministry of Finance

  22. 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 DEBT FINANCING Ministry of Finance

  23. 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 GOVERNMENT DEBT MANAGEMENT Ministry of Finance

  24. MEDIUM TERM STRATEGY Ministry of Finance

  25. 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 FISCAL POLICY Ministry of Finance

  26. Fiscal policy aims to achieve the following major socio-economic 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 FISCAL POLICY OBJECTIVES Ministry of Finance

  27. 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

  28. ARE MICs AT RISK • For Fiji, No as most of our loans are from domestic sources • We minimize exposure from global risks

  29. THANK YOU Ministry of Finance

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