Fiji is taking significant measures to safeguard its foreign reserves during a period marked by economic instability and high inflation. Reserve Bank of Fiji (RBF) Governor Ariff Ali stated this at the State of Economy breakfast event in Suva, where he outlined the central bank’s policies regarding exchange controls, which are essential for ensuring an adequate level of foreign reserves.
Ali noted that the International Monetary Fund (IMF) recommends maintaining reserves equivalent to three months’ worth of imports, but the RBF aims for a cushion of four months. Over the past 25 years, he has observed multiple instances where foreign reserves came under pressure, including during political crises in 2000 and 2006, as well as the COVID-19 pandemic.
Highlighting the potential impact of rising oil prices, Ali warned that an increase from $60 to $100 per barrel could lead to a loss of around $500 million in foreign reserves for Fiji. He expressed concern that significant hikes in import prices would negatively affect both the country’s reserves and its economic optimism.
Ali stressed the importance of protecting the Fijian populace and businesses, given the historical precedents of currency degradation linked to instability and inflation. He acknowledged that while some stakeholders may be dissatisfied with the current exchange control measures, they are vital for economic stability.
Moreover, he addressed the monetary policy actions taken by the RBF, explaining that interest rates have been maintained at historic lows at 0.25 percent. Although the IMF has suggested raising rates significantly, RBF officials are mindful of public needs during this challenging economic climate.
The governor articulated that the central bank believes the current stance on monetary policy is appropriate, as economic growth appears sluggish and inflation is nearly negative. Maintaining sufficient foreign reserves is crucial, as any pressure in this area could lead to liquidity issues and increased market interest rates.
As of the February 2026 economic review, the RBF reported that foreign reserves were stable at around $3.6 billion, enough to cover 5.2 months of retained imports, and it is projected to remain adequate in the medium term. This positive outlook provides some reassurance amid the current economic challenges, reflecting the RBF’s commitment to supporting Fiji’s economy through cautious fiscal management.
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