A-G disinclined to money-printing idea
10 July, 2020, 11:56 pm
We are in the business of managing the economy well and not leading the nation into huge inflation, says Attorney-General and Economy Minister Aiyaz Sayed-Khaiyum.
He made the comment in response to a question from Nadi Chamber of Commerce and Industry president Dr Ram Raju during a recent 2020-2021 national budget consultation in Nadi.
Dr Raju asked if Government would consider printing $1 billion and injecting it into the economy, as suggested by a local economist.
“We are not in the business of printing money, if we start printing money, without any terms and conditions, it will lead to huge inflation and the value of our dollar will come down,” Mr Sayed-Khaiyum said.
“All countries in the world have deficits, it is how we fund those deficits that is critically important.
“Fiji’s debt to GDP ratio is at about 47 per cent and under the new COVID-19 response budget, it has gone up to 60 per cent and we expect it to go even higher.
“The reality of the matter is the revenue is not as strong as it used to be, previously 70 per cent of our borrowings has been onshore, 30 per cent offshore.
“The reason why we do that is because it’s better to borrow onshore because you don’t have the foreign currency exposure.”
Mr Sayed-Khaiyum said going forward, Government wanted to borrow more money offshore in a bid to prop up foreign exchange.
“Our foreign reserve levels were sitting at pretty healthy levels, at about six months worth of reserves and we are in a good space there but obviously, that can get depleted very soon if less tourists or tourists don’t start coming in, with the reduction in our exports and if we don’t have enough foreign exchange coming through.”