Lending to private sector increases
The RBF has forecast the domestic economy is expected to gain momentum in the coming months as tourism and related service industries continue to recover amidst the further easing of global travel restrictions.
Governor, Ariff Ali says concomitantly, lending to the private sector increased by 1.4% annually in March.
This was driven by increased lending to private sector business entities by commercial banks and the Fiji Development Bank, mostly through targeted lending facilities accessed via the RBF.
Ali highlights, in the first three months of this year, the drawdown of new loans from commercial banks totalled $716.9 million, much higher than the $501.3 million in the same period last year.
As a result of these special lending facilities, as well as higher reserves and other injections, the Governor says liquidity conditions remained buoyant at $2,077.1million as of April 29th.
He says this is placing downward pressure on lending rates as commercial banks’ cost of funds hovers near historic allows.
However, Ali says investment spending remains relatively subdued, underpinned by a fall in domestic cement production and sales in the year to March.
He says this is also consistent with the drop in the number of building permits approved in 2021.
Additionally, new loans for building and construction purposes fell to negative 17.2% during the review period although that was offset to some extent by the increase in lending to the real estate sector.
Ali says the rise in building material prices by 4.8%, along with investors’ cautionary strategy ahead of the General Elections, is projected to constrain investment activity in the coming months.
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