Tuesday, December 01, 2009

Budget 2010 : luxury oriented

post by: Rawfijinews


December 1, 2009

Fiji’s economy cannot be rebuilt on the back of political instability, violation of human rights and repressive measures under the Public Emergency Regulations, says the Fiji Labour Party.

“You must first of all secure confidence in the future of the country,” said FLP Leader Mahendra Chaudhry commenting on the 2010 Budget and the interim Prime Minister’s statement that his entire focus would be on building the economy.

Prospects for growth remain highly uncertain under the current state of political developments coupled with adverse conditions, as pointed out by the visiting IMF Mission team earlier this week.

Having isolated itself from the international community, Fiji is now paying a high price in terms of the inaccessibility of foreign aid money which is negatively affecting its economic performance, Mr Chaudhry said.

A case in point is the current critical condition of the sugar industry now that it is denied the benefits of hundreds of millions of dollars in funding assistance from the European Union under the Alternative Measures Programme (AMP).

It should be noted that almost 75% of the objectives of Budget 2009 have not been achieved owing to a lack of cash. The same infrastructure projects are targeted again in Budget 2010 – eg. the upgrading of airports in Rotuma and Matuku, road development and rehabilitation projects such as the Queen’s and King’s Highways, the sealing of the Sawani-Serea Road, Buca Bay Road and the Moto-Balevuto Roads which were programmed to commence in the first quarter of 2009.

“Presenting a Budget is one thing, delivering on promises made therein is another,” said Mr Chaudhry.

The Labour Leader described the 2010 Budget as a luxury oriented Budget, referring to the extensive list of government giveaways, with little in it for the poor.

The $30 a month food voucher will be little comfort to those at destitute levels at a time when food prices have escalated as a result of the devaluation of the Fiji dollar. According to a Consumer Council survey prices have shot up as much as 100-200% post-devaluation.

“Reduction of the corporate tax to 28% was totally unnecessary. It creates inequities with personal income taxes remaining high at 31%,” Mr Chaudhry said.

While the FLP welcomes the $10,000 grant to first home buyers, it will largely benefit those in the middle and upper middle brackets who will be able to secure bank loans to buy homes.

It will do nothing to alleviate the mushrooming squatter problem or help those in the lower income bracket who are unable to build or buy a home.

The fairly generous list of giveaways will only aggravate government’s already troubled financial situation by further lowering revenue which in 2009 was already down by 10%.

A 3.5% deficit projection for Budget 2010 is on the higher side; so is the national debt levels estimated at over 50% of the Gross Domestic Product (GDP).

It is obvious that the regime is not heeding advice from the IMF which has called on government to reduce debts to 45% of GDP and lower the 2010 Budget deficit to 2% of GDP.

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