The Fiji government has defended its borrowing programme, arguing that public debt is being used primarily to finance long-term infrastructure projects that will strengthen economic growth and improve productivity rather than fund day-to-day government expenditure.
Responding to public debate over the country's fiscal position following the release of the 2026-27 National Budget, the Ministry of Finance said much of the government's recent borrowing has been directed towards roads, bridges, water infrastructure, public buildings, border facilities and digital government systems that are expected to deliver economic benefits for decades.
The ministry said these investments should be viewed as capital expenditure rather than recurrent spending, noting that modern infrastructure is essential to attracting private investment, supporting tourism, improving logistics and creating economic opportunities throughout Fiji.
Officials said better transport networks, more reliable utilities and upgraded public infrastructure would reduce business costs, improve connectivity and raise productivity across key sectors of the economy.
The government acknowledged that Fiji, like many countries, experienced a sharp rise in public borrowing during and immediately after the Covid-19 pandemic as authorities sought to protect employment, support businesses and maintain essential public services during the economic downturn.
Since then, restoring fiscal sustainability while continuing to invest in infrastructure has become one of the government's principal economic objectives.
The ministry said improving revenue collection, maintaining responsible expenditure management and supporting stronger economic growth will remain central to its fiscal strategy as it works to gradually reduce the budget deficit while sustaining investment.
The government's position comes as Fiji's 2026-27 National Budget adopts what officials describe as a strategy of fiscal consolidation rather than sweeping reform, reflecting an economy where tourism has largely recovered, construction activity remains robust and private investment continues to improve.
One of the budget's most notable features is the decision to leave major tax settings largely unchanged.
Corporate income tax, personal income tax and value-added tax remain broadly intact, providing businesses with greater policy certainty and allowing investors to plan long-term projects with increased confidence, particularly in sectors such as tourism, manufacturing and construction.
Infrastructure remains the centrepiece of the government's economic strategy.
Funding has been allocated to transport infrastructure, water systems, public services, border facilities and digital government initiatives, including measures to streamline building approvals through digital platforms to improve the ease of doing business.
The government said these investments are intended not only to support employment during construction but also to improve long-term productivity and lower operating costs for businesses.
The budget also places increased emphasis on workforce development as Fiji continues to address shortages of skilled labour.
Measures include revisions to the National Training and Productivity Centre levy and enhanced tax deductions for employer-funded training programmes, reflecting concerns over the continued migration of experienced workers overseas and the need to strengthen domestic skills.
The most debated measure in the budget is the introduction of a five per cent Tourism Services Tax on larger tourism operators.
The government said the levy will help finance aviation and tourism infrastructure needed to support the industry's long-term growth.
However, the Fiji Hotel and Tourism Association has warned that the additional tax comes at a time when operators are already facing rising labour costs, higher insurance premiums and increased prices for imported goods.
While the tourism sector remains internationally competitive, industry representatives have cautioned that additional costs could affect pricing as Pacific destinations compete for visitors.
Economists generally distinguish between borrowing for productive investment and borrowing to finance ongoing operating expenses, noting that infrastructure spending can strengthen future economic performance provided projects are carefully selected, efficiently implemented and generate measurable returns.
Business organisations have broadly welcomed the government's emphasis on infrastructure investment, policy stability and skills development, while continuing to call for prudent debt management and disciplined project execution to preserve investor confidence.
The ministry said balancing infrastructure investment with debt sustainability will remain one of the country's key economic policy challenges.
It added that maintaining access to development finance, strengthening public finances and delivering projects efficiently will be critical to sustaining confidence among international lenders, development partners, businesses and private investors.
Rather than pursuing dramatic fiscal changes, the government said the 2026-27 Budget seeks to build on Fiji's post-pandemic recovery through careful fiscal management, continued infrastructure investment and measures designed to support long-term economic growth.
