The Parliament of the Republic of Fiji has approved a motion allowing the Government to guarantee borrowings by the Fiji Development Bank (FDB) for the next 12 months.
Under the motion passed yesterday, the Government will guarantee FDB borrowings through the issuance of short and long-term bonds, promissory notes, term deposits, Reserve Bank of Fiji financing facilities and other short-term borrowings for the period March 1, 2026 to February 28, 2027.
The motion also increases the Government guarantee limit for FDB borrowings from $190 million to $220 million, an increase of $30 million for the same period.
Speaking during the debate, Opposition Leader Inia Seruiratu said the main challenge facing FDB remains the high cost of funds compared to commercial banks.
Seruiratu said the bank’s lending rate averages around 6 percent, while it borrows funds at around four to five percent, leaving it with a very thin margin.
“The cost of funding is still high when it comes to FDB. The average lending rate is around six percent and the margin is thin, yet they continue to strive to finance development,” he said.
He suggested that one possible solution would be to allow FDB to accept savings deposits, similar to commercial banks.
Seruiratu noted that the proposal had been discussed previously between FDB and the Reserve Bank of Fiji in 2024.
“If FDB is allowed to accept savings deposits at rates between 0.05 percent and 1.5 percent, it would reduce the cost of funds and allow the bank to lend more competitively,” he said.
He added that such a move would help the bank finance more development projects and potentially offer lower interest rates to its customers, particularly in high-risk sectors.
Seruiratu said any change would require the support of the Reserve Bank.
