The International Monetary Fund published a concluding statement from its staff discussions with Fiji, projecting that growth will slow to around 2½ percent in 2026 and inflation will rise to around 2¼ percent as tourism softens and higher global oil prices weigh on the outlook. It flagged downside risks led by fiscal financing pressures, higher-than-assumed fuel prices, tighter global financial conditions, and Fiji’s structural constraints and exposure to natural disasters. To rebuild limited fiscal space, the IMF recommended growth-friendly deficit reduction supported by revenue mobilization and expenditure rationalization, including restoring the value-added tax rate to its previous level, alongside targeted social assistance to cushion vulnerable households from fuel price increases rather than broad subsidies or price caps. It assessed Fiji’s exchange rate peg as continuing to serve the economy well, while calling for stronger monetary policy transmission through a gradual normalization of liquidity conditions and interest rates. The banking system was described as sound with adequate capital and liquidity and improving asset quality, but credit growth in housing and unsecured lending was highlighted for close monitoring, and continued strengthening of the AML/CFT framework was linked to ongoing engagement in the Asia/Pacific Group on Money Laundering mutual evaluation process; the statement also noted that implementation of the authorities’ development strategy has lagged and called for clearer reform prioritization, sequencing, and capacity to mobilize investment, including in climate-resilient infrastructure.

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