2 Mar 2007

Fiji budget cuts pays, offers little on growth

4:51 pm on 2 March 2007

An economics expert in Fiji says the interim government's budget succeeds in slashing its public sector bill but there's little focus on economic growth.

Fiji's interim finance minister presented a new budget today, stressing that the 5 per cent pay cut for public servants would be restored once the economy recovered.

Mahendra Chaudhry's budget totalled 900 million US dollars dollars compared to the previous SDL government's 964 million US dollar budget for 2007.

Mr Chaudhry said one of the interim government's challenges was to reverse the widening trade deficit and stabilise the country's foreign reserves positions.

He said reforms in the sugar industry would be vigorously pursued to lift sugar cane production from the present level of 3 million tonnes to 4 million tonnes in the next three years.

An associate professor of economics at the University of the South Pacific, Dr Mahendra Reddy, says civil servant pay cuts are just a short term solution.

"Long term what you want is a leaner and a smaller work force who are well paid rather than a larger workforce who are not. That's not a solution to the issue of a very unsustainably high wage and salaries bill in the budget."

But Dr Reddy says the government should work with the business community to increase investment and revenue in the country.