Fiji: Sustained Private Sector-Led Growth Reform Program

approved

This Program is proposed for support under the COVID-19 Crisis Recovery Facility (the Facility) of the Bank and will be co-financed with the Asian Development Bank (ADB) as a policy-based loan under ADB's Sustained Private Sector-Led Growth Reform Program (Subprogram 3). The Program supports the Government of Fiji's (GOF) 2020 - 2021 budget, that includes a response to COVID-19 to mitigate the extreme public health emergency and ensuing unprecedented economic crisis. The Program will provide budget support to strengthen public finance for public health containment and treatment measures and a fiscal stimulus with a focus on social and economic protection. With 67% of the gross domestic product (GDP) in the country coming from the service sector with tourism contributing up to 40%, the COVID-19 pandemic is bringing the country to a halt. Over the last decade, the country experienced uninterrupted economic growth underpinned by sound macroeconomic policies; GDP fell to 0.5% in FY2019 due to the global economic slowdown combined with the government's push to reduce public debt. . As the public health crisis continues, disruption of supply chains is affecting trade flows; public finance is impacted on an unprecedented scale with taxes collection expected to drop 34%, resulting in public debt topping 60% by July 2020 against a forecast of 47%; a loss of USD 740 million in annual revenues from tourism; and a national budget deficit over 440 million. Within a week after the confirmation of the first case in March 2020, GOF announced a COVID-19 Response Budget of USD 440 million, equivalent to 8.7% GDP. In cooperation with the Fiji National Provident Fund, GOF is providing financial relief to sustain livelihood and disposable income of Fijians impacted by the pandemic. In addition, GOF together with Fiji's financial institutions, is supporting repayment relief, cash-flow and debt restructuring for businesses, especially SMEs reeling from the economic slowdown.