FIJI’S banking system held $2.4billion in surplus funds, keeping lending rates at historically low levels according to the Reserve Bank’s latest economic review.
“As of December 31, the banking system’s liquidity remained ample at $2.4 billion, keeping lending rates at historically low levels,” RBF stated in its December, 2024 economic review.
“However, there have been some observable increases in new time deposit rates, a trend associated with the implementation of BASEL III requirements.
“In November, the commercial banks’ outstanding lending and time deposit rates fell to 4.59 per cent and 1.67 per cent, respectively.”
According to RBF, Fiji’s financial conditions remained conducive for growth.
“In November, broad money expanded by 8.4 per cent annually, primarily driven by a significant rise in private sector credit (11.4 per cent).
“Of this, lending to private sector businesses and households grew by 10.9 per cent and 13.3 per cent, respectively,” it stated.
Consumption and investment showed positive signs with consumption activity remaining “robust”, supported by higher disposable incomes, increased personal remittances and strong tourist demand, according to RBF.
“Partial indicators for consumption, such as, vehicle registrations rose (18.4 per cent) cumulative to November while new consumption lending (excluding refinance) increased (33.8 per cent) to $1.7 billion, lent mostly to the wholesale, retail, hotels and restaurants sector,” it stated.
“On investment, activity has improved but is still slow paced.
The number of building permits issued cumulative to September declined by 35.9 percent, but the value of the permits remained high (97.7 per cent) reflecting increased cost of construction materials and shortage of skilled labour.”
In tandem with these developments, commercial banks’ new lending for investment purposes rose (25.9 per cent) (excluding refinancing) to $883.6 million in the year to November, mostly allocated for building and construction purposes, RBF added.
NOTE: This article was first published in the print edition of the Fiji Times dated January 04, 2025.
