Domestic economy is on its path to recovery – RBF Governor

The Reserve Bank of Fiji Governor and Chairman of the RBF Board, Ariff Ali says the domestic economy is on its path to recovery after two years of contractions led largely by the tourism industry.

Ali says the recent announcement that Fiji is now open to all vaccinated travellers from any country together with the removal of the three-day mandatory hotel stay, as well as the relaxation around travel requirements in New Zealand and Australia, is expected to boost arrivals in the coming months.

He says the feedback from industry stakeholders reveal that forward booking numbers from airlines and hotels already show a steep rise in tourism demand from April onwards.

The RBF Governor says major sectoral performances are also upbeat as gold, timber and electricity production picked up in February.

Consumer spending is also picking up and is evident in higher domestic VAT collections, demand for electricity and spending on both new and second hand vehicles.

Ali says consumption has been supported by higher inward remittances and consumption-related loans.

Labour market conditions have also shown a marked improvement with the vacancy rate in February being the highest since the start of the pandemic.

Ali says investment activity nonetheless, has remained subdued amidst a cautious environment given the upcoming elections, rising costs and global supply chain disruptions.

On the financial sector, Ali states that credit activity had picked up pace aided by the utilisation of the RBF’s targeted lending facilities.

The RBF Governor says loans to the private sector continued to increase, driven by both private sector business entities and private individuals.

Ali says excess liquidity remains more than ample, supported by higher foreign reserves inflows and currently stands at $2.130 billion, maintaining downward pressure on interest rates.

He also says the level of non-performing loans for both commercial banks and licenced credit institutions has trended downwards from the peaks noted in the third quarter of 2021.

The Reserve Bank of Fiji Board has also kept the Overnight Policy Rate unchanged at 0.25 percent following its monthly meeting.