Parliament has passed a motion to guarantee a $130 million loan for the Fiji Development Bank yesterday afternoon.

This guarantee request is to continue the facilitation of the government’s policy by lending to essential sectors of the economy, particularly resource-based sectors.

Deputy Prime Minister and Minister for Finance Professor Biman Prasad moved the motion that Parliament approves, that the government guarantee a sum of $130 million for the 12 month period from March 1st, 2024, to February 28th, 2025.

This will be through the issuance of short- and long-term bonds, promissory notes, any RBF financing facility, and other short-term borrowings.

Prasad says that given that the bank’s forecast inflow is only $61.26 million during the proposed guarantee period, the bank requires an additional $130 million to finance the total outlay of $191.26 million.

Henceforth, the guarantee is for an additional $130 million, which is proposed to be raised from the issuance of bonds and other instruments—promissory notes, short-term borrowings, and RBF financing facilities.

He says the outstanding guaranteed borrowings have been declining over the years.

“The total approved government guarantee for FDB borrowings for the past five years has accumulated to a sum of $920 million, and as of December 31, 2023, only 25 percent—$234.21 million—of this accumulated approved guarantee is outstanding, which the Debt Management Unit in the Ministry of Finance and Strategic Planning is closely monitoring to ensure that associated fiscal risks are mitigated at all times.”

Prasad says the bank’s outstanding liabilities guaranteed by the government as of January 31, 2024, amount to $227.6 million.

“Of which, bonds stood at $45.5 million—21 percent; term deposits at $65.1 million—29 percent; and RBF import substitution and export finance provision at $117.02 million, which is 50 percent. Financial implications of this guarantee: as of October 30, 2023, the total government guaranteed debt stood at $1.02 billion, or 7.7 percent of the GDP.”

He adds that accessing the $130 million guarantee will increase the total government guarantee exposure to $1.2 billion, or 8.7 percent of GDP.

The motion was passed unanimously.