THE Opposition has raised concerns over Fiji’s steady increase in overseas borrowing with State having paid $200 million interest on global bonds in the last five years.
This was revealed by Opposition member and Shadow Minister for Finance Professor Biman Prasad during his address in the National Budget debate that began in Parliament yesterday.
“Another concerning trend is the steady increase in Fiji’s overseas borrowings. We borrow in US dollars, meaning we have to pay the debt back in US dollars. In the next five years it is almost certain that our currency will fall against the US dollar. So we will have to find even more Fiji dollars to repay the same debt.
“In 2006, under the SDL Government, the global bond of $US150m ($F326m) was raised at a 6.8 per cent interest rate. The military government used all of it.
“When it was time to pay it back in 2011, they went and borrowed more money — $US250m ($F543m). But on the new borrowing we paid a 9 per cent interest rate.
“Everybody in the finance sector knows that other institutions offered loans at lower interest rates. But these loans were offered on conditions requiring the Government to manage the economy prudently.
“The Government would not accept these conditions.
“Government has now refinanced its $US250m global bond through another international bond with a coupon rate of 6.625 per cent. The Government has made a big deal of its reduced coupon rate, but this interest rate is payable in rising US dollars. It is more expensive than borrowing in Fiji.
“Government has not told us that it paid close to $200m interest on this bond in the last 5 years. That interest could have gone towards state services such as education and health, or welfare payments. We did not get these services because we had to pay interest. This is why when Government borrows every Fiji citizen pays by sacrificing the services we cannot afford.
“Meanwhile, our interest bill is growing. Interest must be paid from higher taxes or reduced spending. So it is Fiji’s people who will be shackled by the burden of this debt, the largest that Fiji has ever had.”
Prof Biman labelled the sale of Government assets as shocking.
“But the most shocking thing about the sale of Government assets — the FEA, Airports Fiji, Fiji Ports Company Ltd — is that the money we will collect will not be used to reduce debt. It will be used to fund ordinary Government annual spending. It is like selling your house so you can pay for your groceries. When we are left with no assets, what will we do then?