Press Release No. : 06/2023
Date : 27 April 2023
At its monthly meeting on 27 April, the Reserve Bank of Fiji (RBF) Board decided to maintain the Overnight Policy Rate at 0.25 percent.
When announcing this decision, the Governor and Chairman of the Board, Mr Ariff Ali, highlighted that “the International Monetary Fund’s recent downgrade of the global growth forecast for 2023 revealed the emergence of economic fragilities, which, when coupled with persistent inflation can dampen domestic development prospects.”
Domestically, some sectoral indicators under observation reflected softer performance in the recent month, with the exception of solid electricity production and total visitor arrivals which increased noticeably in the first quarter of the year, mainly underpinned by more visitors from Australia, New Zealand, and North America. The outlook for visitor arrivals for 2023 is now expected to be higher than earlier projected based on the trend in arrivals for the first quarter, which track higher than the 2019 total for the same period. Therefore, given the relatively significant contribution of the tourism sector to the economy, the GDP growth forecast for this year is now upward biased.
While higher employment intentions are related to improved economic conditions and businesses filling vacant positions from migrating workers, the job market has remained tight. At the same time, the pickup in employment levels and higher inward remittances, has induced positive consumption activity. However, due to policy-related uncertainties and the persistent higher cost of building materials, the rate of investment is anticipated to remain modest in the near future.
The Governor added that financial conditions remain accommodative, with high system liquidity at $2,338.4 million (26/04). In March, private sector credit increased annually, consistent with historically low lending rates and more favourable economic conditions. As debt serviceability improved further in February, the value of non-performing loans for commercial banks and licensed credit institutions fell further, while the banking industry’s capital remained adequate.
On the RBF’s twin monetary policy objectives, Mr Ali mentioned that “the headline annual inflation rate rose to 2.0 percent in March, lower than the outcome last year (4.7%). Furthermore, foreign reserves are at $3,303.0 million (27/04), sufficient to cover 6.1 months of retained imports, and is projected to remain adequate in the near to medium term.”
The Board agreed to continue with the accommodative monetary policy stance given the comfortable outlook on the dual monetary policy objectives. However, the Governor indicated that the adjustment of the Overnight Policy Rate would be undertaken if needed.
RESERVE BANK OF FIJI
For further details, please contact:-
Communications Office
Telephone: (679) 3223 381 Email: info@rbf.gov.fj
Mr Mervin Singh – Manager Corporate Communications
Telephone: (679) 3223 229 Email: mervin@rbf.gov.fj