Download - DEVELOPMENT COOPERATION WITH MICS
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Mereseini Q. WaibutaMinistry of Finance (Fiji)
10 March, 2014In Seoul, Korea Ministry of Finance
PRESENTATION AT THE PLENARY SESSION
DEVELOPMENT COOPERATION WITH MICS
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OUTLINE
Ministry of Finance
• Fiji at a Glance
• Fiscal Developments
• Debt Management
• Medium Term Fiscal Strategy
• Relevance of MIC Classification
• Are MICs at risk2
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FIJI AT A GLANCE
• Total Area: 18, 274 sq km• Population : 858, 038 (2012
Est)• GDP Per Capita: $4, 728
(2012)• Gini (2009): 42.8• HDI (2013): 0.702 • Currency: FJD (USD 0.54 )
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FISCAL DEVELOPMENTS
Ministry of Finance
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FISCAL DEFICITS
Ministry of Finance
-3.4
-6.2
-5.3-5.8
-3.1 -3.3-2.9
-2.1
0.5
-4.1
-2.2
-1.4-1.1
-2.6
-1.9
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013r 2014b
% of GDPAverage deficits of around 2 percent of GDP since 2006!!
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GOVERNMENT REVENUE
Ministry of Finance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014(B)
0
500
1000
1500
2000
2500
3000
Tax Non Tax
$M
2,721
1,804
911
1,401
2,0531,937
Buoyant performance in revenues with record high collections in 2013Growing economy and improved compliance efforts
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INDIRECT TAX REVENUE
Ministry of Finance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (R)
2014 (B)
0
200
400
600
800
1000
1200
1400
1600
1800
420 456515
661 699 713781 792 805 760
877
1,1121,230
1,402
1,622
$M
Significant increases in revenue from indirect taxes….rising spending and strength of the economy
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VAT PERFORMANCE
Ministry of Finance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (R)
2014 (B)
0
100
200
300
400
500
600
700
800
900
194252 269
378 404 415473 466 453
403
496
619664
734
846
$M
Steady growth in VAT collections
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TRADE TAXES - CUSTOMS
Ministry of Finance
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Government Operating Savings 2000 - 2014
Ministry of Finance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(R)
2014(B)
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
$M
OperatingRevenue
Operating Expenditure
Operating Savings
Government operating savings growing over the years and channeled to-wards CAPEX…
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GOVERNMENT EXPENDITURE
Ministry of Finance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014(B)
0
500
1000
1500
2000
2500
3000
1,032
1,252 1,322
1,559 1,427
1,669
2,014
2,327
2,883
$M
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CAPITAL OPERATING MIX
Ministry of Finance
0
20
40
60
80
100
2007 2008 2009 2010 2011 2012 2013 (R) 2014 (B)
86 8579 79
73 7368 64
14 1521 21
27 2732
36
% of Exp
Operating Expenditure Capital Expenditure
Quality of fiscal deficits improved with greater resources channeled to capital expenditure
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2013 Total ExpenditureAverage 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%
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INCREASE FUNDING FOR ROADS & JETTIES
Ministry of Finance
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INCREASE FUNDING FOR ELECTRICITY & WATER
Ministry of Finance
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INCREASE FUNDING FOR EDUCATION
Ministry of Finance
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INCREASE FUNDING FOR HEALTH
Ministry of Finance
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GOVERNMENT DEBT
Ministry of Finance
2,887
3,132 3,3833,567 3,680
3,813 3,975
49.9
55.8 56.2 54.5 53.4
49.0 48.0
0
10
20
30
40
50
60
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2008 2009 2010 2011 2012 2013 (P) 2014 (B)
$M
TOTAL DEBT DEBT AS % OF GDP
%
Debt levels stabilizing and expected to reduce further with planned fiscal consolidation
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DEBT MIX
Ministry of Finance
3439 42 45 45 44 46 43 42
46 4641 38 35
5.6
5.34.8
3.9 3.5 3.27.8
7.2 8.29.2 8.9
12.413.0
14.5
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f
Domestic External
% of GDPExternal debt will reduce after global bond repayment in 2016
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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
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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
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MEDIUM TERM STRATEGY
Ministry of Finance
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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
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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 standards26
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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
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ARE MICs AT RISK
• For Fiji, No as most of our loans are from domestic sources
• We minimize exposure from global risks
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