High liquidity for Fiji: IMF

March 27, 2024 6:35 am

[File Photo]

The International Monetary Fund believes that Fiji’s liquidity is high enough, looking at the low policy rate.

IMF Mission Chief for Fiji, Marshall Mills, highlights that policy rate and liquidity need to work together.

Mills says that Fiji’s liquidity currently stands at $2 billion, which is equivalent to 16 percent of our GDP.

Article continues after advertisement

“As long as you have excess liquidity, any measures you take will not affect behaviour until you get to a point where liquidity becomes tight for some of the economic actors, such as banks. Banks may lend a little less if liquidity is tight.”

The Mission Chief emphasizes that excess liquidity limits the immediate impact of any monetary policy.

According to Mills, the Reserve Bank of Fiji has been working extremely hard to lower Fiji’s liquidity from 22% of GDP to 16%, and it should keep going in that direction to preserve a stronger economy.