THE Asian Development Bank (ADB), Fiji’s biggest multilateral creditor will soon be issuing bonds in Fiji denominated in the Fiji dollar as part of moves to boost financing options for the private sector.
In an interview with Pacific regional news service Pacnews, newly appointed director general of the ADB Pacific Department Emma Veve said this would remove foreign exchange risk by transferring it to them (see interview on – https://www.fijitimes.com.fj/building-resilience-3/)
Fiji and Tonga are the first two countries in the Pacific in which ADB will issue its local currency bonds.
“We’ve been hearing this from the private sector, when we try to talk to them about borrowing from us is that we usually lend in US dollars or a couple of other big international currencies. “But if someone wants to borrow in Fiji dollars or the Tongan Pa’anga, we weren’t able to help that.
“And that moves the foreign exchange risks, if we could, from the borrower to us.
“We’re much better equipped to balance all those foreign exchange risks. We’re dealing in large amounts of money and lots of currencies,” Ms Veve said.
The Fijian Government’s support of the initiative was relayed to the ADB by Deputy Prime Minister and Minister of Finance Prof Biman Prasad during a high-level event organised by the ADB in the margins of its 58th Annual Meeting in Milan, Italy early this month.
“The event marked a significant milestone in ADB’s efforts to deepen financial markets in the Pacific, with mechanisms now successfully established in both Fiji and Tonga to facilitate the issuance of
bonds in domestic markets,” the Ministry of Finance said in a statement after the meeting.
“These mechanisms are designed to allow ADB to mobilise local currency resources, reducing foreign exchange risks for domestic borrowers and unlocking much-needed private sector investment.
“In his remarks, DPM Prasad emphasised that this initiative is a critical step toward accelerating capital market development in Fiji.
“He noted that access to local currency finance will allow ADB to support private sector projects that may fall outside the purview of traditional commercial lending, while also providing valuable technical assistance to ensure their success.”
Prof Prasad also encouraged ADB to explore similar local currency financing avenues for government on concessional terms, as this would support our efforts to maintain a prudent balance between domestic and external public debt.
