RBF: Liquidity level increase
In its June economic review, the RBF stated as of June 30, foreign reserves increased further to $3.2b and expected to remain comfortable into the medium term.
Meanwhile, aggregate demand remained sluggish given the reduced spending power of households and firms amid the subdued economic environment.
The review also highlighted in the year to May, partial indicators of consumption activity such as net VAT collections reduced by 20.9 per cent, new vehicle registrations decreased by 9.5 per cent and new consumption lending by commercial banks declined by 13 per cent on an annual basis.
However, on the upside, robust annual growth continued for second-hand vehicle registrations with an increase of 119.9 per cent cumulative to May, underpinned by the reduction in fiscal duties and easing of regulatory requirements on the import of second-hand vehicles.
Meanwhile, the central bank highlighted that a year on from the onset of the pandemic, movements in monetary aggregates continued to reflect weak real sector activity.
According to the RBF, domestic credit growth remained subdued (y-o-y: +0.5 per cent) in May, weighed down by the continued contraction in private sector credit (-3.4 per cent).
“Broad-based declines in private sector credit were noted across institutions, with commercial banks accounting for much of the reduced activity.
New lending by commercial banks, cumulative to May, was also lower (-3.7 per cent) when compared with the same period last year,” the RBF stated.
Credit: The Fiji Times
