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A Fiji economist believes increasing the country’s deficit to 3.5 percent of GDP in 2010 would help cushion the impact of the global economic crisis and the general decline in the economy.
Professor Biman Prasad speaking at the Fiji Economy Update 2010 in Suva said the government’s strategy to increase the deficit to 3.5 percent is reasonable.
“The fiscal stimulus would allow the government to inject necessary expenditure into key economic sectors,” he said.
Prasad however stressed the government’s projections for 2011 and 2012 appeared to be unrealistic.
“It is unlikely that the government will be able to contain its expenditure and deficit levels as projected,” he said.
“This is because it has to meet substantial debt-servicing burden and low levels of economic growth will affect its revenue generation.”
Prasad also believes the revenue forecasts for 2011 and 2012 seem overly optimistic.
By Rachna Lal
