An International Monetary Fund (IMF) team, led by Alasdair Scott, recently completed its Article IV mission to Fiji. The discussions with Fijian authorities and other stakeholders took place in Suva and Nadi from March 12 to 25, 2025.
In a statement concluding the visit, Mr. Scott remarked on Fiji's economic recovery. He noted that growth is expected to ease to around 3 percent in 2025 due to tourist arrivals returning to pre-pandemic levels and increased regional price competition impacting average earnings per tourist per night. Over the medium term, GDP growth is anticipated to settle slightly below the pre-pandemic trend of 3.3 percent.
Mr. Scott highlighted several risks facing Fiji's economy: "The global economy could suffer from increased trade frictions, disruptions to FDI, and higher global inflation." He added that although direct effects from higher tariffs are likely minimal for Fiji, there could be a slowdown in external demand affecting tourism, goods exports, and remittances. Additionally, natural disasters pose significant challenges for the country.
However, progress has been made over the past year in addressing key challenges. Fiscal consolidation has advanced while delays in worker permit approvals have decreased. Despite this progress, public debt remains high and the current account deficit is projected to stabilize at around 7 percent of GDP over the medium term.
To address both near-term and medium-term issues, Mr. Scott emphasized rebuilding fiscal buffers as a priority: "Fiscal policy should promote growth-friendly consolidation and a shift from current to capital spending." A primary surplus of around 2 percent of GDP by FY2030 is recommended to ensure a downward path for the debt-to-GDP ratio.
Monetary policy adjustments were also suggested: "Pandemic-related current account exchange restrictions should be reversed now that economic conditions have normalized," he stated. Furthermore, close monitoring of unsecured consumer credit growth was advised despite banks being profitable and solvent.
Progress has been noted in enhancing Fiji's business environment with new systems facilitating quicker processing times for permits and business registrations. However, further acceleration in structural reform momentum is needed for attracting foreign direct investment (FDI) and boosting long-term growth prospects.
Mr. Scott concluded by expressing gratitude towards Fijian authorities: “The team had fruitful discussions with the Deputy Prime Minister...and private sector representatives.” The IMF team appreciated their cooperation during this mission.