Reserve Bank of Fiji governor Ariff Ali has urged the government to direct recent concessional financing toward easing supply‑side pressures — particularly fuel price stability and energy infrastructure — to contain costs without stoking inflation. Ali made the appeal while responding to questions about new offshore support, including a $US200 million package from the Asian Development Bank (ADB) and additional budget help from Australia, saying how the funds are spent will determine their net effect on consumer prices.
“If directed towards easing supply‑side pressures, such as energy‑related costs or transport constraints, the net effect on inflation could be neutral to stabilising,” Ali told this newspaper. He reiterated that global commodity prices, rather than the offshore loan itself, will have the more direct and substantial influence on domestic inflation, and that the Reserve Bank is continuing to monitor inflation dynamics closely.
The ADB concessional financing — roughly estimated at FJ$440 million in local currency — together with AU$30 million (about FJ$47.2 million) in Australian budget support to respond to the fuel crisis, has given the government greater policy space amid a challenging international environment, Ali said. “From a macroeconomic perspective, this assistance helps to stabilise finances, reduce immediate pressures on reserves and the budget as well as sustain investor and business confidence without resorting to more costly financing options,” he added.
Ali stressed that concessional borrowing carries obligations but is typically offered on more favourable terms than commercial debt: lower interest rates, longer maturities and reduced risk. He also noted that exchange‑rate exposure is managed at the national level and that the key is ensuring borrowing is prudent and spending well‑targeted and consistent with medium‑term fiscal sustainability.
The governor flagged the immediate policy choice facing authorities: prioritise supply‑side interventions that cushion shocks and protect core economic functions, or risk fueling inflationary pressures if support is misapplied. He said the RBF views the most effective use of the recent assistance as measures that stabilise supply — for instance, investments to strengthen energy infrastructure or address transport bottlenecks — rather than measures that would directly boost aggregate demand.
The call comes as Fiji continues to grapple with fuel supply and price challenges that have disrupted transport and aviation services. Earlier this month Fiji Airways announced operational restrictions on some regional routes because of fuel availability and uplift constraints, a practical reminder of the transport and energy vulnerabilities policymakers face. Ali warned that while concessional funds can help, global developments — notably commodity price swings and tensions affecting shipping routes — remain powerful drivers of domestic fuel costs.
On public finances, Ali acknowledged a slight uptick in government debt but said it is expected to trend down over time as fiscal deficits are reduced. “When used to cushion shocks, support confidence, and protect core economic functions, such financing can help stabilise the economy while minimising inflationary risks,” he said, signalling the central bank’s preference that the new funds be channelled into measures that shore up supply and avert further disruptions to businesses and consumers.