Press Release No. : 22/2021
Date : 02 December 2021
The Honourable Minister for Economy, Mr Aiyaz Sayed-Khaiyum, tabled the August 2020–July 2021 Annual Report of the Reserve Bank of Fiji (RBF) in Parliament on 02 December 2021. The Report details the audited financial statements, initiatives and the operations of the Reserve Bank for the financial year (FY) ending 31 July 2021.
The RBF Governor, Mr Ariff Ali, highlighted in the report that the 2020-21 FY was a challenging one, marked by the spread of the COVID-19 Delta variant that plunged Fiji into a health crisis and almost bringing economic activity to a standstill. The 2020-21 FY economic performance was mainly characterised by weak sectoral performances, particularly in tourism-related sectors, subdued employment conditions, and dismal consumption and investment activities. Following a sharp contraction of 15.7 percent in 2020, the domestic economy is expected to contract further in 2021, albeit at a relatively slower pace of 4.1 percent, with the subsequent achievements in target vaccination rates, easing of COVID-19 related restrictions and expected resumption of international travel and tourism.
Despite extraordinary pandemic-induced challenges, the RBF continued to safeguard its mandates by adopting a broad-range of measures to ensure monetary and financial stability conducive to the recovery of the economy. An accommodative monetary policy stance was maintained by the RBF during the financial year with the Overnight Policy Rate kept at a low of 0.25 percent, as the Bank’s twin monetary policy objectives of low inflation and adequate foreign reserves remained intact. While the financial system remained stable, through quantitative easing measures, additional liquidity was injected into the monetary system to maintain credit flows and cushion the shocks arising from the pandemic. In particular, the allocation for the Disaster Rehabilitation and Containment Facility was raised
to $350 million from the previous funding of $150 million, while the Import Substitution and Export Finance Facility allocation stood at $300 million. The maximum interest rate charged on these facilities was also reduced to 3.99 percent from 5.00 percent to offer relief to eligible businesses. Other initiatives undertaken included the Reserve Bank issuing a new wholesale corporate bonds regulation to assist firms in diversifying their options for raising finance and improving the competitiveness of Fiji’s financial sector. Broader strategic objectives of the Bank were also strengthened in particular leveraging technology for operational efficiency which featured prominently as prolonged containment measures kept majority of the staff working remotely.
Notwithstanding the low global interest rate environment, the Reserve Bank maintained its cost rationalisation measures and reported a net profit of $31.7 million for the 2020-21 FY. This was slightly higher than the $30.1 million recorded in the preceding year, which was largely due to higher earnings from domestic investments. A transfer of $32.9 million was made to Government in September this year, which accounts for $1.0 million transfer to the General Reserve Account and is inclusive of $2.2 million being one-fifth of the Revaluation Reserve Account, as required under section 34(3) of the RBF Act.
Governor Ali acknowledged with appreciation the support of all stakeholders as well as development partners for their contributions and support during the 2020-21 FY and reaffirmed that the RBF will continue to support the domestic economy and preserve financial stability moving forward.