development cooperation with mics
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PRESENTATION AT THE PLENARY SESSION. DEVELOPMENT COOPERATION WITH MICS. Mereseini Q. Waibuta Ministry of Finance (Fiji) 10 March, 2014 In Seoul, Korea. Ministry of Finance. Fiji at a Glance Fiscal Developments Debt Management Medium Term Fiscal Strategy - PowerPoint PPT PresentationTRANSCRIPT
Mereseini Q. WaibutaMinistry of Finance (Fiji)
10 March, 2014In Seoul, Korea Ministry of Finance
PRESENTATION AT THE PLENARY SESSION
DEVELOPMENT COOPERATION WITH MICS
1
OUTLINE
Ministry of Finance
• Fiji at a Glance
• Fiscal Developments
• Debt Management
• Medium Term Fiscal Strategy
• Relevance of MIC Classification
• Are MICs at risk2
FIJI AT A GLANCE
• Total Area: 18, 274 sq km• Population : 858, 038 (2012
Est)• GDP Per Capita: $4, 728
(2012)• Gini (2009): 42.8• HDI (2013): 0.702 • Currency: FJD (USD 0.54 )
3
FISCAL DEVELOPMENTS
Ministry of Finance
4
FISCAL DEFICITS
Ministry of Finance
-3.4
-6.2
-5.3-5.8
-3.1 -3.3-2.9
-2.1
0.5
-4.1
-2.2
-1.4-1.1
-2.6
-1.9
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013r 2014b
% of GDPAverage deficits of around 2 percent of GDP since 2006!!
5
GOVERNMENT REVENUE
Ministry of Finance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014(B)
0
500
1000
1500
2000
2500
3000
Tax Non Tax
$M
2,721
1,804
911
1,401
2,0531,937
Buoyant performance in revenues with record high collections in 2013Growing economy and improved compliance efforts
6
INDIRECT TAX REVENUE
Ministry of Finance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (R)
2014 (B)
0
200
400
600
800
1000
1200
1400
1600
1800
420 456515
661 699 713781 792 805 760
877
1,1121,230
1,402
1,622
$M
Significant increases in revenue from indirect taxes….rising spending and strength of the economy
8
VAT PERFORMANCE
Ministry of Finance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (R)
2014 (B)
0
100
200
300
400
500
600
700
800
900
194252 269
378 404 415473 466 453
403
496
619664
734
846
$M
Steady growth in VAT collections
9
TRADE TAXES - CUSTOMS
Ministry of Finance
10
Government Operating Savings 2000 - 2014
Ministry of Finance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(R)
2014(B)
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
$M
OperatingRevenue
Operating Expenditure
Operating Savings
Government operating savings growing over the years and channeled to-wards CAPEX…
11
GOVERNMENT EXPENDITURE
Ministry of Finance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014(B)
0
500
1000
1500
2000
2500
3000
1,032
1,252 1,322
1,559 1,427
1,669
2,014
2,327
2,883
$M
12
CAPITAL OPERATING MIX
Ministry of Finance
0
20
40
60
80
100
2007 2008 2009 2010 2011 2012 2013 (R) 2014 (B)
86 8579 79
73 7368 64
14 1521 21
27 2732
36
% of Exp
Operating Expenditure Capital Expenditure
Quality of fiscal deficits improved with greater resources channeled to capital expenditure
13
2013 Total ExpenditureAverage 2001 - 2005
Move to higher capital mix to support the economy – Increases in expenditure mostly towards CAPEX
$2,274m$1,202m
2014 Total Expenditure
$2,814m
GROWING THE CAPITAL BUDGET
Operating 81%
Capital 19%Capital 32%
Operating 68% Operating 64%
Capital 36%
14
INCREASE FUNDING FOR ROADS & JETTIES
Ministry of Finance
15
INCREASE FUNDING FOR ELECTRICITY & WATER
Ministry of Finance
16
INCREASE FUNDING FOR EDUCATION
Ministry of Finance
17
INCREASE FUNDING FOR HEALTH
Ministry of Finance
18
GOVERNMENT DEBT
Ministry of Finance
2,887
3,132 3,3833,567 3,680
3,813 3,975
49.9
55.8 56.2 54.5 53.4
49.0 48.0
0
10
20
30
40
50
60
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2008 2009 2010 2011 2012 2013 (P) 2014 (B)
$M
TOTAL DEBT DEBT AS % OF GDP
%
Debt levels stabilizing and expected to reduce further with planned fiscal consolidation
20
DEBT MIX
Ministry of Finance
3439 42 45 45 44 46 43 42
46 4641 38 35
5.6
5.34.8
3.9 3.5 3.27.8
7.2 8.29.2 8.9
12.413.0
14.5
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f
Domestic External
% of GDPExternal debt will reduce after global bond repayment in 2016
21
DEBT FINANCING
Ministry of Finance
• Borrowings in the domestic market
• High liquidity and low interest rate environment
• External bilateral loans from EXIM Bank China and Malaysia
• Global bond for financing in 2011
22
GOVERNMENT DEBT MANAGEMENT
Ministry of Finance
• Reduction in fiscal deficits and expected economic growth positive for reducing public debt
• Entire Borrowing channeled to capital budget
• Offshore sinking fund to settle US 250m global bond in 2016• Currently US 140m (3% of GDP)
• This will reduce external debt composition
• Utilizing callable options to reduce debt servicing costs in current
low interest rate environment
• Reforms undertaken with partial divestment in entities to
minimize risks from contingent liabilities
23
MEDIUM TERM STRATEGY
Ministry of Finance
24
FISCAL POLICY
Ministry of Finance
• Focused on raising investment, economic growth while at the
same time ensuring fiscal sustainability
• Adequate resources is channeled towards priority sectors
(infrastructure development, education, health, agriculture,
social protection, renewable energy, etc)
• Encouraging private sector investment through a competitive
tax regime (new tax incentives and tax reduction in 2012)
• Containing deficit to ensure sustainable debt
25
FISCAL POLICY OBJECTIVES
Ministry of Finance
Fiscal policy aims to achieve the following major socio-
economic objectives:
• Growth levels of 5 percent over the medium term
• Diversifying the economy for new sources of growth
• Promoting export-led growth and exploring opportunities for
import substitution
• Ensuring access to essential services such as proper
infrastructure , education, health, water, etc
• Creating additional opportunities for employment and
reducing poverty to improve the overall living standards26
RELEVANCE OF MIC CLASSIFICATION
• Predominantly Income-based to differentiate countries
• Does not consider the development challenges that Fiji has to address e.g. Social Protection Policies to help alleviate poverty
• Does not consider special needs esp our vulnerability challenges as Small Island Developing States e.g. CC & DRM
27
ARE MICs AT RISK
• For Fiji, No as most of our loans are from domestic sources
• We minimize exposure from global risks
28
