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The board of Fiji’s Reserve Bank has decided to reduce the delegated limits on a few exchange controls.
Reserve Bank governor Savenaca Narube said in view of the worsening global economy and its possible impact on foreign reserves, the board decided on a reduction in the delegated limits on certain exchange controls.
He said with immediate effect, overseas travel allowances were reduced to $5,000 per traveller and limits for credit and debit card payment reduced to $5,000 per month.
He said these delegated limits would be reviewed on an ongoing basis.
Narube said this was agreed at its board meeting Thursday while leaving its monetary policy package largely unchanged.
He said the board noted with much concern that the outlook of the world economy was getting progressively worse.
He added even the International Monetary Fund (IMF) had now expected the global economy to decline for the first time in 60 years this year.
“The impacts of this deepening world recession on Fiji’s trading partners are now intensifying and will have significant flow on effects to Fiji’s tourism industry and commodity exports,” Narube said.
“These will continue to exert pressure on our balance of payments,” he said.
“Domestic demand continues to be weak. This is not surprising as the effects of the global slowdown and the impact of the floods feed into our economy,” Narube said.
He said that in line with the data received by the central bank so far, as well as from the feedback from various industries, “we expect to significantly revise down Fiji’s economic growth for the year”.
On a positive note, Narube said inflation eased sharply to 1.9 per cent in February from 6.6 per cent in January.
He said post floods, supply of market items seemed to have normalised quicker than expected, which should ease price pressures further.
“However, the year-end projection remains at 4.5 percent and accounts for possible risks, such as a turnaround in oil prices later in the year,” he said.
