An increased allocation of $100m has been provided to the Import Substitution and Export Finance Facility by the Reserve Bank of Fiji. [Source: File Photo]

An increased allocation of $100m has been provided to the Import Substitution and Export Finance Facility by the Reserve Bank of Fiji.

This is in addition to measures announced last month says, Governor Ariff Ali.

The RBF has offered three facilities targeted at Small and Medium Enterprises which includes a Credit Guarantee Scheme, Import Substitution and Export Finance Facility and a Disaster, Rehabilitation, and Containment Facility.

The aid packages now total $300 million credit to exporters, large scale commercial agricultural farmers, public transportation, and renewable energy businesses at concessional interest rates with commercial banks, credit institutions, and the Fiji Development Bank.

Ali says combined with the SMEs Credit Guarantee Scheme and the relief packages offered by banks, these initiatives should help contribute to easing the financial difficulties imposed on private sector businesses by COVID-19.

The Governor says the current downturn in global and local economic activity will likely persist until risks from the health crisis are resolved or mitigated.

The Fijian economy is expected to contract more sharply than the negative 4.3 percent previously estimated for 2020.

Ali says as a result of the unprecedented COVID-19 health crisis, domestically, consumption, and investment activity have contracted due to weak aggregate demand and business confidence.

Ali says the halt in tourism activity is expected to continue into the second half of the year.

A rebound in economic activity in 2021 is dependent on the pandemic abating, a resumption of global travel, and lifting of domestic restrictions from the third quarter of this year.

However, Ali says the recovery is likely to be protracted, with significant downside risks given the fluid status of the pandemic.

He emphasized that the RBF’s twin monetary policy objectives of stable inflation and adequate foreign reserves remain intact.

Inflation was negative 2.8 percent in March, down from 4.0 percent in the same period last year, owing to lower prices for yaqona, food, kerosene, and diesel.

Foreign reserves remained adequate at just over $2.2b as of 30th April, sufficient to cover 6.9 months of retained imports of goods and services.