Liquidity improves

Geraldine Panapasa
Friday, October 12, 2012

LIQUIDITY increased by $49.3 million to $576.7m over the month to September largely because of an increase in foreign reserves.

The economic review, according to the Reserve Bank of Fiji for the month ending September 2012, also noted commercial banks outstanding lending rate declined further by 9 basis points to 6.89 per cent while the time deposit rate fell by 18 basis points to 2.33 per cent in August.

"Financial conditions during the review month remained conducive to intermediation with ample lquidity in the banking system and low interest rates," the report said.

"Broad Money decelerated in August to 3.3 per cent from 5.7 per cent in July led to a 10.5 per cent decline in net foreign assets.

"Domestic credit grew by 5 per cent in August underpinned mainly by higher private sector credit. The pickup in credit momentum compared to last year should support growth going into next year."

The report said foreign reserves were around $1601.3m at the end of September, sufficient enough to cover 5.1 months of retained imports of goods and non-factor services.

Meanwhile, the Enterprise Surveys 2009 noted the percentage of firms in Fiji paying for security increased to 57.3 per cent compared to 51.3 per cent for the Asia-Pacific region, and 57.5 per cent for all countries surveyed.

"Fiji's economic freedom score is 57.3, making its economy the 105th freest in the 2012 Index.

"Its overall score is 3.1 points lower than last year due to considerable declines in property rights and freedom from corruption."

Fiji is ranked 18th out of 41 countries in the Asia-Pacific region, and its overall score is below the world and regional averages according to The Heritage Foundation Index of Economic Freedom.

The World Bank business environment snapshot 2012 said financial institutions in Fiji were widely utilised by firms to fund business investments in 2009, averaging 37.1 per cent while 22.8 per cent of firms in Fiji had ISO certification ownership.