Environment in Which We Operate
The role of the Reserve Bank in maintaining and enhancing macroeconomic stability gained prominence over the last five years as the Fijian economy faced significant challenges. Externally, the Global Financial Crisis (GFC) in 2008 and high commodity and food prices posed implications for our external position as the global economy’s growth slowed. The uncertain political environment domestically together with the devastating impact of natural disasters depressed economic activity and growth. Against this background, policymaking became increasingly difficult with the Reserve Bank having to implement drastic policy measures such as the devaluation in 2009, to stabilise the economy.
While growth remains below potential, it is noteworthy that the economy has stabilised considerably with the twin objectives of monetary policy remaining intact and foreign reserves at a comfortable level. From the low level of less than F$500 million in early 2009, foreign reserves have consistently surpassed the one billion dollar mark and are anticipated to remain at comfortable levels over the coming years. Similarly, inflation is expected to be at moderate levels going forward. Furthermore, the Bank pursued unconventional central banking measures as it took on a greater role in the development of the economy with initiatives such financial inclusion and the promotion of small to medium enterprises.
At this juncture, the medium term outlook is favourable with the economy expected to expand by more than two percent per annum from 2012-2015. The policies initiated by the Reserve Bank over the last few years have been geared largely towards aiding economic recovery and creating an environment that is conducive to investment and growth.