Ritika Pratap 
Fiji’s fiscal position was already under pressure before the pandemic with the average deficit growing to around four percent during the financial year 2016 to 2020.
The Asian Development Bank in its Pacific Economic Monitor says this was mostly due to weaker revenue collection and exacerbated by the onslaught of several tropical cyclones which strained government resources.
The ADB says the share of indirect and direct taxes to total revenue declined during financial year 2020 to 2023 to 53 percent (from 63 percent during 2014−2019), and to 21 percent from 25 percent, as grants and asset sales increased.
It says revenue performance weakened due to tax policy measures implemented in the years before the pandemic such as the reduction of the VAT rate from 15 percent to nine percent, a higher personal income tax-free threshold, and an increased use of tax incentive schemes.
In addition, the tax reduction measures introduced in the financial year 2021, as part of the government’s COVID-19 support package, resulted in overall revenue loss equivalent to five percent of GDP.
The report also states that several tropical cyclones such as Ian, Pam, Winston, and Harold have pushed the government to reallocate spending to provide immediate relief to affected citizens and earmark capital resources for reconstruction costs.
