While the budget is a "bitter pill" for Fiji's 900,000 people "there are no other choices," said military-appointed Finance Minister Mahendra Chaudhry, the country's former prime minister, as he unveiled tough economic measures.

He said the budget for 2007, initially introduced late last year, had been cut by $193 million to $828 million.

Austerity measures saw budgets for education, health, the armed forces and police cut, while the number of government departments was reduced from 23 to 16.

Duty and taxes on luxury goods increased sharply, while duty on some imported basic food items was cut.

Revenue-generating measures include retention of a 12.5 percent goods and services tax and improving the government's tax collection system.

Chaudhry said the budget aimed to stabilize government finances, redirect resources to productive areas and impose responsible fiscal management.

"We have reached an extremely critical situation, where ... we have to either swim or sink. I intend to swim and make sacrifices for our well-being. If we continue on the current path, then it will spell doom for Fiji," Chaudhry warned.

The finance minister, who held the same role in the 2000 government ousted in a nationalist coup, said adjustments costs for taking the country to financial and economic stability would be borne by everyone.

He blamed Fiji's financial woes on irresponsible borrowing, mismanagement and "inefficiencies" by the ousted government of former Prime Minister Laisenia Qarase.