‘Risks remain’

RISKS to the financial sector remain as the ending of moratoriums offered by financial institutions to COVID-19 affected customers could raise the existing levels of non-performing loans.

This was highlighted by the Reserve Bank of Fiji governor and chairman of the Macroeconomic Committee, Ariff Ali at the monthly meeting of the board yesterday.

Mr Ali said the slump in global travel continued to affect tourism and related industries, adding that while some uptick was noted in sectoral performances over the review month, aggregate demand continued to be weak as well.

The committee had also decided to maintain the overnight policy rate at 0.25 per cent.

In a statement issued yesterday, Mr Ali noted that partial indicators for consumption spending, investment activities and labour market conditions recorded annual contractions in the first 10 months of the year.

He added that given the sluggish economy, domestic credit had slowed and interest rates had generally declined owing to high levels of liquidity, which was about $856.5 million as at November 25.

Mr Ali highlighted that “while most countries across the globe will note an economic contraction this year, economic conditions improved somewhat over the third quarter because of various monetary and fiscal stimulus measures.

“The announcement of three vaccines showing considerable efficacy rates in initial trials are a much needed positive development, as risks remain elevated given the daily increases in new COVID-19 cases and the recent re-enactment of lockdown measures in several countries.”

The RBF had also announced a revised economic contraction on Wednesday.

Mr Ali reiterated that 2020 would note the largest projected economic contraction on record at -19.0 per cent and the recovery forecast for next year was contingent on the reopening of borders and resumption of international travel.

Given this uncertainty, economic growth for 2021 is anticipated to range between 1.6 per cent and 8.0 per cent, while in 2022, growth is forecast to be between 5.2 per cent and 8.7 per cent.