RBF reduces interest rate on special lending facilities from 1% to 0.25%

The Reserve Bank of Fiji Board has reduced the interest rate from 1% to 0.25% for loans taken by financial institutions under its Import Substitution and Export Finance Facility, Disaster Rehabilitation and Containment Facility and the Housing Facility.

Effective from today, commercial banks, licensed credit institutions, Fiji Development Bank and Housing Authority of Fiji can access funding from the Reserve Bank at 0.25% per annum.

The Governor and Chairman of the RBF Board, Ariff Ali says in line with the reduction in the interest rate that RBF charges, the maximum interest rate that lending institutions can charge for on-lending these funds to eligible businesses and households will be lowered from 5%to 3.99% per annum.

This change applies to new loans and existing rolled over loans, effective from today.

Ali says the reduction of interest rates on the Bank’s special lending facilities will reduce the borrowing costs of all businesses and households who have accessed the facility.

He says this should provide some measure of relief in helping reduce the negative impact of the second wave of COVID-19 on their activities.

Ali added that the change is also consistent with the broad reduction of interest rates in the market over the year and that the Reserve Bank will continue to engage with the lending institutions in broadening the accessibility of the facilities.

The scheme has a combined funding allocation of $550 million.

Ali says to date, a total of $339 million in loans has been disbursed under various facilities.

He says the lower rate implemented under the facilities will be reviewed after two years.