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

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

3. FIJI AT A GLANCE Total Area: 18, 274 sq km Total Area: 18, 274 sq km Population : 858, 038 (2012 Est) Population : 858, 038 (2012 Est) GDP Per Capita: $4, 728 (2012) GDP Per Capita: $4, 728 (2012) Gini (2009): 42.8 Gini (2009): 42.8 HDI (2013): 0.702 HDI (2013): 0.702 Currency: FJD (USD 0.54 ) Currency: FJD (USD 0.54 ) 3

4. FISCAL DEVELOPMENTS Ministry of Finance 4

5. FISCAL DEFICITS Ministry of Finance 5

6. GOVERNMENT REVENUE Ministry of Finance 6

7. DIRECT TAX REVENUE Ministry of Finance 7

8. INDIRECT TAX REVENUE Ministry of Finance 8

9. VAT PERFORMANCE Ministry of Finance 9

10. TRADE TAXES - CUSTOMS Ministry of Finance 10

11. Government Operating Savings 2000 - 2014 Ministry of Finance 11

12. GOVERNMENT EXPENDITURE Ministry of Finance 12

13. CAPITAL OPERATING MIX Ministry of Finance 13

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

15. INCREASE FUNDING FOR ROADS & JETTIES Ministry of Finance 15

16. INCREASE FUNDING FOR ELECTRICITY & WATER Ministry of Finance 16

17. INCREASE FUNDING FOR EDUCATION Ministry of Finance 17

18. INCREASE FUNDING FOR HEALTH Ministry of Finance 18

19. DEBT MANAGEMENT Ministry of Finance 19

20. GOVERNMENT DEBT Ministry of Finance 20

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

22. DEBT FINANCING Ministry of Finance 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 22

23. GOVERNMENT DEBT MANAGEMENT Ministry of Finance 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 23

24. MEDIUM TERM STRATEGY Ministry of Finance 24

25. FISCAL POLICY Ministry of Finance 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 25

26. FISCAL POLICY OBJECTIVES Ministry of Finance 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 26

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 27

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

29. THANK YOU Ministry of Finance 29