Economists in Fiji are forecasting a tough 2007 national budget when it is tabled in parliament next week.
The Fiji Times quotes a USP economist, Ron Singh, as saying it seems likely that with the decline in current and future growth rates, the budget will be deficit financed.
Mr Singh says this would mean more borrowing which would increase the debt level.
He says the government might also increase Value Added Tax, which is charged on almost all goods and services and currently stands at 12-point-6%.
This is the government's biggest source of revenue.
The USP's associate professor of economics, Dr Mahendra Reddy has called on the government to cut operating expenses and increase the allocation for capital projects and infrastructure development.