Economy growing; People earning and spending more: A-G

A-G Aiyaz Sayed-Khaiyum. Picture: FT FILE

FIJI’S economy is growing and the Fijian people are earning and spending more money, says Economy Minister Aiyaz Sayed-Khaiyum.

Responding to a question on the country’s economic situation during his live Facebook consultation on the 2019-2020 National Budget, Mr Sayed-Khaiyum said this was a good thing and had an impact on the overall liquidity.

He said it was the Reserve Bank of Fiji’s (RBF) job to manage the country’s liquidity and given our high levels of foreign reserves and low core inflation, RBF adopted a monetary policy stance that supported the growth of the Fijian economy.

“They (RBF) accomplish that through their monetary policy stance, but there are many other factors as well that can impact liquidity in the country.

“Thanks to steady management and a strong Fijian economy, our current levels of liquidity are adequate and ample to support economic activity in Fiji.” Mr Sayed-Khaiyum said liquidity levels could fluctuate for a number of reasons.

“In Fiji’s case, our liquidity has been affected by the strong growth of the Fijian economy, reconstruction from Cyclone Winston and higher disposable income.

“These factors can increase import levels, which can decrease liquidity in the economy.”

He said unfolded rumours were being spread by certain politicians on the economy.

“There isn’t going to be any depreciation (Fiji dollar).

“Honourable Lynda Tabuya (SODELPA Whip) recently made some flagrantly false public statements on the issue, falsely claiming that liquidity rates in Fiji are low.

“This may be particularly confusing as in recent years members of her own party have taken the opposite stance; the former shadow minister of economy actually complained when bank liquidity was too high.

“We need to cut to the truth instead of spreading misinformation for political gain at the cost of damaging confidence in our economy.

“Showboating is to be expected in politics but intentionally spooking the markets, including banks, investors, our development partners and ordinary Fijians, for your own political gain.

“Casually throwing around words like ‘crisis’ when none exists and in fact, the opposite is true, is hugely irresponsible and a disservice to all Fijians.”

He said there was no impending threat to the Fijian economy.

“Anyone making that suggestion has an elementary understanding of how bank liquidity works in relation to the economy. Bank liquidity refers to the surplus funds that commercial banks hold at the end of each day and that is deposited with the Reserve Bank of Fiji. Liquidity is basically the sum total of all the funds that it holds in its bank accounts.

“As at March 5, 2019, the level of bank liquidity in Fiji was $317.2 million. “Let’s put that number into perspective. The level of bank liquidity during the entire tenure of the SVT Government, led by then prime minister Sitiveni Rabuka (now the honourable Leader of the Opposition) averaged just $25.1 million.

“That’s less than 8 per cent of current totals. Levels even dipped as dangerously low as $0.5 million in February 1995. That means bank liquidity in Fiji today is more than 1100 per cent higher than the average under the SVT Government.

“Another important measure of our financial position is the interest rate, or the cost that is charged to a borrower (such as a business looking to expand) for their loan. “The recent 0.5 per cent rise in the interest rate in Fiji is a reflection of our growing economy.

“Honourable Tabuya’s suggestions that a small increase in interest rates is a sign of economic weakness is, again, wholly ignorant to market realities.”

By contrast, Mr Sayed-Khaiyum said interest rates under previous Fijian governments were much higher.

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