Foreign reserves are projected to remain adequate, boosted by Govt loan drawdowns and the resumption of international travel – RBF Board

Foreign reserves are projected to remain adequate, boosted by Govt loan drawdowns and the resumption of international travel – RBF Board

By Vijay Narayan
Thursday 27/01/2022

The Reserve Bank of Fiji Governor and Chairman of the Board, Ariff Ali says data for the 2021 December quarter depicted a pickup in aggregate demand indicators when compared to the previous quarter, supported by the gradual easing of COVID-19 restrictions, pent-up demand supplemented by higher remittances, improved employment prospects and festive season spending, as well as the optimism around the reopening of international borders.

The Board says major sectoral production such as pine wood, woodchips, mahogany, mineral water and gold also noted an increase last year supported by higher export demand.

The Governor says liquidity, which currently stands at around $2.102 billion, has helped suppress any upward pressure on commercial bank lending rates, which fell to 5.77 percent at the end of 2021 from 6.12 percent in the previous year. Private sector credit grew marginally by 0.3 percent after declining for the last seventeen months, driven by higher commercial bank new lending to businesses and households.

The Board says contrastingly, the level of non-performing loans in the banking system remains elevated, though declining in recent months.

The Governor says the twin objectives of monetary policy remain intact with foreign reserves holdings at the end of 2021 totalling $3.201 billion, equivalent to 9.9 months of retained imports cover.

Foreign reserves are currently around $3.153.8 billion, sufficient to cover 8.7 months of retained imports of goods and services.

The RBF Board says while the rise in import prices poses challenges going forward, foreign reserves are projected to remain adequate, boosted by Government loan drawdowns and the resumption of international travel.

It has also maintained the Overnight Policy Rate at 0.25 percent following its monthly meeting.

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