FIJI’S SPIRALING DEBT A DUBIOUS LEGACY

Editorial

FIJI’S SPIRALING DEBT A DUBIOUS LEGACY

Fiji Sun

SUVA, Fiji (Sept. 19) – Whether or not one agrees with Fiji Labour Party leader Mahendra Chaudhry that the government's borrowing has been fuelled by corruption and mismanagement, the fact remains that it is by any measure out of control.

Warnings from various sources - including the Reserve Bank - have gone unheeded over the past four years as the nation's debt has steadily spiraled.

Is this really the legacy we wish to leave our children?

For, make no mistake, they are the ones who will pay for the government's borrowing binge.

Now that the national debt has passed the psychologically important milestone of half of our Gross National Product, the alarm bells should be ringing throughout the corridors of power.

Those responsible, however, seem strangely unworried no matter how gloomy the economic portents.

Things do not look good. The sugar industry is in crisis. The garment industry faces an uncertain future and tourism cannot be relied upon to grow indefinitely. Our export sector is weak while imports are sucked in at an ever-increasing rate fuelled by consumer spending.

It's a recipe for disaster. We are living beyond our means and every householder and every small businessperson knows what the eventual outcome will be - bankruptcy. Nations, of course, cannot in the strict sense go bankrupt but they can reach a stage where borrowing becomes prohibitively expensive or even impossible. And when that happens the services provided by governments become prohibitively expensive - or non-existent.

Nobody suggests that Fiji is at that stage. But the warning signs are there.

We have little to show for our record borrowing. Schools, hospitals and infrastructure have not been dramatically improved and there seems little likelihood of their being so.

Part of the difficulty appears to be that too much of the government's borrowing has been used to fund recurrent spending such as wages and expenses. So money borrowed this year will have to be borrowed again next year unless the government can find income or savings in the recurrent budget.

That hasn't happened.

Now, with an election looming, there will be massive temptation to borrow yet more in next month's budget in order to please the voters.

That would be very bad for the country's future.

October 20, 2005

FijiSUN: http://www.sun.com.fj/

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