23 Oct 2007

Fiji's two percent deficit labelled a mistake

6:29 pm on 23 October 2007

An economist at the University of the South Pacific, or USP, says the Fiji interim government's policy of maintaining a two percent deficit is a mistake.

Biman Prasad, who is the head of the USP's School of Economics, says the interim government would be sensbile to spend more on infrastructure, the private sector and unemployment to help bring Fiji out of economic decline.

He says the coup affected sectors that would have had economic growth in 2007.

"The government made a mistake by insisting on a two percent deficit when it could have gone a little bit higher and created a little bit more economic activity.''"

Biman Prasad says this would have given time for the economy to recover.

He says the government needs to run on a higher deficit just for a short period to keep the economy afloat.