The Government of Fiji owes its own registrar of Government debt over $600 million. According to the Government’s annual debt report for 2022-2023, the Reserve Bank of Fiji (RBF) held a total of $694.3 million in Government bonds at the end of July 2023. This is a significant increase from the $59.4 million held in July 2019.
Economists attribute this rise to quantitative easing, a process where the central bank injects new money into the economy by purchasing securities. Former Reserve Bank of Fiji governor Savenaca Narube explained that this approach was particularly employed during the COVID-19 pandemic. Due to the impact of COVID-19 on other institutions that typically purchase Government bonds, RBF intervened by buying these bonds.
Narube advocated for such measures during the peak of the pandemic, suggesting that RBF should print $500 million in new money to lend to the Government, which would then support micro, small, and medium enterprises, low-income earners, and families who had lost their jobs. However, this proposal was rejected by the then Minister of Finance, Aiyaz Sayed-Khaiyum, who warned that such actions could result in high inflation.
Despite this, the debt report reveals that by July 2020, RBF had already increased its bond holdings to $360.1 million from $59.4 million in 2019, and further to $694.8 million by July 2022. According to Narube, this indicates that RBF was injecting new money into the financial system, a function only it could perform.
Narube emphasized that such central bank interventions should not continue during normal times since financial markets have stabilized. He expects this process to decline over time, allowing the marketplace to handle Government funding.
The Reserve Bank of Fiji serves as the Government’s registrar of debt, issuing debt instruments on behalf of the Fiji Government.