Fiji Boosts Development Bank Guarantees: What It Means for the Economy

The Fijian government has recently approved a Government Guarantee for borrowings by the Fiji Development Bank (FDB) covering the period from March 1, 2025, to February 28, 2026. This endorsement includes a considerable increase in the government guarantee ceiling from $130 million to $190 million for the upcoming period.

Currently, the government guarantee of $130 million for FDB’s borrowings is set to expire on February 28, 2025. This guarantee is critical for facilitating borrowings through various instruments, including short- and long-term bonds, promissory notes, term deposits, and any financing options from the Reserve Bank of Fiji as well as other short-term borrowings.

In addition to this specific guarantee for FDB, it is important to consider the broader context of the government’s financial commitments. Recently released financial results from the Ministry of Finance show that the government has guaranteed a total of $1.6 billion in debt held by state-owned enterprises, further adding to the existing debt of $10.309 billion already reflected in the government’s financial statements. This marks a 6.7% decrease from the previous year, largely attributed to repayments of guaranteed debts.

A three-tier risk assessment strategy has been employed to evaluate these obligations, considering historical performance, interim financial reports, and industry evaluations, including the economic conditions impacting these enterprises. Notably, entities like the Fiji Sugar Corporation Limited have been identified as high-risk due to their current financial struggles in maintaining operations without government support.

With the government’s enhanced guarantee for the Fiji Development Bank and the overall revamping of fiscal strategies, there is potential for positive implications for Fiji’s economic resilience and financial stability. The increased capacity for funding through the bank may support local development projects and further economic growth, benefiting both the government and the citizens in the long run.