Fiji’s Reserve Bank cuts select interest rates

The Reserve Bank of Fiji has reduced interest rates in a bid to reduce borrowing costs for businesses and households.

Commercial banks and licensed credit institutions operating in Fiji can now access funding from the Reserve Bank at a dramatically reduced rate of 0.25% per annum. The previous rate was 1%. It applies to funds borrowed under the Bank’s Import Substitution and Export Finance Facility, Disaster Rehabilitation and Containment Facility and the Housing Facility, which have a combined funding allocation of F$550 million.

The Fiji Development Bank and Housing Authority can also access funds from the Reserve Bank at this lowered rate from today.

The Bank says as a result, these lending institutions must drop the interest rates they charge for on-lending  from 5% to 3.99%, a change that will apply to new loans and existing rolled-over loans.

Reserve Bank Governor and Chairman, Ariff Ali states:  “This should provide some measure of relief in helping reduce the negative impact of the second wave of COVID-19 on their activities.”

He says the change is consistent with the broad reduction of interest rates in the market over the year.

So far $339.0 million in loans has been disbursed under the three facilities. The lower interest rates will be reviewed after two years.

The announcement comes after the release of Reserve Bank figures yesterday showed declines in  private sector credit, new investment lending, net domestic credit, and commercial banks’ new loan lending.