FIJI’S banking system is experiencing a significant liquidity boost, currently holding $2.4 billion in surplus funds as reported in the latest economic review from the Reserve Bank of Fiji (RBF). This robust liquidity is contributing to historically low lending rates, which were at 4.59% for outstanding loans as of November, while time deposit rates reached 1.67%.

Despite the prevailing low lending rates, some upward movement in new time deposit rates has been noted, correlating with the implementation of BASEL III requirements aimed at enhancing risk management in banks.

The financial conditions in Fiji are looking favorable for continued economic growth. The broad money supply has seen a notable annual increase of 8.4%, with private sector credit rising significantly by 11.4%. Lending to businesses grew by 10.9%, and household credit expanded by a remarkable 13.3%. These numbers imply a resilient confidence within the private sector and a robust consumption environment, further supported by increased disposable incomes, personal remittances, and a resurgence in tourism.

Consumption activity has shown positive indicators, such as a striking 18.4% rise in vehicle registrations by November and a significant 33.8% growth in new consumption lending, mostly directed toward the wholesale, retail, hotels, and restaurants sectors.

On the investment front, while there are signs of improvement with a 25.9% uptick in new investment lending, challenges persist. The number of building permits issued saw a sharp decline of 35.9%, although the total value of these permits increased dramatically by 97.7%, pointing to rising construction costs and a shortage of skilled labor.

In conclusion, despite some hurdles in the investment landscape, the strong liquidity and positive lending trends highlight Fiji’s economic resilience and potential for further growth. The RBF’s outlook remains optimistic as Fiji navigates its financial future on a path toward sustainable economic development.