Fiji’s banking system is currently experiencing a surplus of $2.4 billion, which contributes to historically low lending rates, as reported in the Reserve Bank of Fiji’s latest economic review. As of December 31, 2024, the RBF confirmed ample liquidity in the banking sector, which has enabled these low rates despite a slight uptick in new time deposit rates due to the implementation of Basel III requirements.
The data indicates that, in November, outstanding lending rates from commercial banks fell to 4.59 percent, while time deposit rates stood at 1.67 percent. It is also notable that broad money in Fiji increased by 8.4% during the year, and private sector credit rose sharply by 11.4%. This growth reflects a strong recovery, with lending to businesses and households seeing increases of 10.9% and 13.3%, respectively.
Consumption activities within the country remain robust, supported by higher disposable incomes, increased personal remittances, and a resurgence in tourism demand. Celebratory indicators, such as a significant 18.4% increase in vehicle registrations and a dramatic 33.8% rise in new consumption lending to $1.7 billion—in particular, to sectors like wholesale, retail, and restaurants—further illustrate the strengthening economic conditions.
On the investment front, while activity has improved, challenges remain. There was a notable 35.9% decline in the number of building permits issued, yet the value of these permits surged by 97.7%, influenced by rising construction costs and a shortage in skilled labor. However, commercial banks reported a healthy increase of 25.9% in new lending for investment, primarily allocated to building and construction projects.
Overall, while investment faces hurdles, the current liquidity position and positive trends in lending suggest that Fiji’s economic framework is resilient and optimistically positioned for continued growth. The promise of increased activity and investment lending could lead to sustainable economic development in the near future, with the Reserve Bank encouraging a cautious yet hopeful outlook moving into the upcoming year.
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