The Reserve Bank of Fiji (RBF) has reduced interest rates on special lending facilities which would reduce the borrowing costs of all businesses and households who have accessed the facility.

According to a statement from the bank, the board had approved a reduction in the interest rates the RBF charged financial institutions that borrowed under its Import Substitution and Export Finance Facility (ISEFF), Disaster Rehabilitation and Containment Facility (DRCF) and the Housing Facility (HF).

It was stated that effective from June 1, 2021, commercial banks, licenced credit institutions, the Fiji Development Bank and Housing Authority could access funding from the RBF at a lower rate of 0.25 per cent per annum, as compared with 1.00 percent previously.

The bank stated in line with the reduction in the interest rate it charged, the maximum interest rate that lending institutions could charge for on-lending these funds to eligible businesses and households would be lowered from 5.00 per cent to 3.99 per cent per annum.

This change applied to new loans and existing rolled over loans from June 1, 2021.

RBF governor and board chairman Ariff Ali said this should provide some measure of relief in helping reduce the negative impact of the second wave of COVID-19 on their activities.

He also said the change was consistent with the broad reduction of interest rates in the market over the year and the RBF would continue to engage with lending institutions in broadening the accessibility of the facilities.

It was stated the scheme had a combined funding allocation of $550 million, comprising $300 million under ISEFF, $150 million under DRCF and $100 million under HF.

A total of $339 million in loans has been disbursed under these facilities to date as the lower rate implemented under the facilities would be reviewed after two years.