Fiji will have a massive budget deficit of 6 percent of the Gross Domestic Product this year.
This is because expenditure has increased above the forecast because of the effects of Cyclone Ami and revenue has been well below estimates because an anticipated sale of shares in state-owned companies did not take place.
As well, inflation this year rose to 4.7 percent because of a rise in Value Added Tax.
The finance minister, Ratu Jone Kubuabola, disclosed this when tabling the 2004 budget in parliament today.
For next year, Ratu Jone has tabled a 650-million US dollar budget in which he hopes to reduce the deficit to 3.5 percent.
Of this amount, 82 percent will be spent on the operating expenses of the government and only 18 percent on capital expenditure, a sharp drop from this year's figure.
The finance minister has reduced the rate of company and personal tax from 32 percent to 31 percent.
He has also granted tax concessions of 200 percent to companies which contribute at least 50-thousand US dollars to a new Sports Development Fund to be established this year.
Ratu Jone says sports has become an important revenue earner for the country with many Fijians playing overseas.
He has also granted tax concessions of 150 percent to companies which buy vehicles for donation to the police force.
The police, health and education budgets have been increased but the military will remain at its current strength of 2,950 personnel.
Customs and Excise taxes on alcohol and cigarettes have been increased by 3 percent.
The Sugar Export Tax has reverted back to 3 percent after being raised to 10 percent for this year.
Ratu Jone has forecast economic growth of 4.7 percent next year underpinned by strong performances in tourism, construction and the mining sectors.