‘Investment spending rises’

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LIQUIDITY in the banking system stands at $1,990.8m as of December 31, 2021, as quantitative easing measures by the Reserve Bank of Fiji (RBF) had helped keep borrowing rates low.

According to the economic review for the month of December, commercial banks’ lending and deposit rates declined over the year and over the month in November 2021, except for the new time deposit rate which increased over the month.

“The weighted average outstanding lending rate of banks was 5.79 per cent in November compared with 6.15 per cent a year ago,” it stated.

The review stated global commodity prices generally increased in December 2021.

Brent crude oil price was said to have increased to US$77.78 ($F165.26) per barrel from $US70.57 ($F149.94) a month ago, as concerns over the impact of the Omicron variant on global energy demand eased and prices regained.

“Similarly, gold prices (+2.9 per cent) increased on the back of its safe-haven demand while world market sugar (+1.5%) prices picked-up in line with higher crude oil prices.

“The FAO food price index rose for the

Reserve Bank of Fiji’s economic review for the month of December 2021 revealed that investment spending had risen, although at a slower pace. fourth consecutive month in November 2021, the highest since June 2011, led by robust import demand for wheat and dairy products amid tight supplies.”

The review also revealed that investment spending had also risen, although at a slower pace.

“New loans for investment activity increased by 3.1 per cent (excluding refinancing) in the year to November, driven by higher lending to the real estate (+10.9 per cent) category.

“While domestic cement production (-22.6 per cent) and sales (-22.7 per cent) noted annual declines over the same period, both indicators have been improving consistently over the month since June last year.”

In November 2021, the Fijian dollar (FJD) appreciated against the Australian dollar (AUD) (2.5 per cent), New Zealand dollar (NZD) (+2.4 per cent) and the Euro (+0.3 per cent ) but depreciated against the Japanese Yen (JPY) (-3.1 per cent) and the US dollar (USD) (-3.1 per cent) according to the review.

“Over the year, the FJD strengthened against the JPY (+6.6 per cent), Euro (+3.5 per cent), AUD (+1.1 per cent) and the NZD (+0.7 per cent) but weakened against the USD (-2.4 per cent).”

RBF stated that inward personal remittances grew by 16.2 per cent in the 11 months of 2021 to total $752.7 million.

“Of the total cash transfers received, $445.2 million were remitted via money transfer operators, $161.9 million through mobile money platforms, and $145.6 million through commercial banks.”

It was also stated that high global energy and food prices, coupled with continued supply chain bottlenecks and labour shortages, continued to affect domestic prices.

“Inflation has been on a rising trajectory in the second half of 2021 and is expected to maintain the momentum in the first quarter of 2022.

“Annual inflation rate is estimated to have been around 2.0 per cent at the end of 2021 and projected to rise to 2.5 per cent by the end of 2022,” stated the review.

Foreign reserves are said to have remained above adequate levels and had been supported by external loan drawdowns by the Government, additional Special Drawing Rights allocation by the International Monetary Fund, grants received by the Government from development partners and more recently the resumption of tourism activity.

At the end of 2021 (December 31), foreign reserves were around $3.2 billion, sufficient to cover 9.9 months of retained imports of goods and services, as stated by the review.