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The cost of government borrowings from the local money markets eased in May, according to the Reserve Bank of Fiji’s latest economic review for the month ended June 2009.
The government, which finances part of its operation through the issuance of IOUs in the form of treasury bills and bonds, is said to be well within its spending budget, although this reflected lower capital spending.
“Latest reports indicate that Government revenue and expenditure are well within budget” RBF said.
Government’s total spending was $190.8 million below budgeted levels. Operating expenditure was within the target by 22 percent, while capital spending was 47 percent lower.
“Government’s capital spending is expected to pick up in the coming months, which will generate more economic activity. Given the improvement in banking system liquidity, Government bond and Treasury Bill issues have been well subscribed.”
RBF data showed that in May, money market rates had eased with a decline in the 91-day Treasury bill rate to 7.24 percent, from 7.3 percent in April while the bond market yields also dropped, with yield on the three, five and 10 year bonds declining to 7.62 percent, 8.15 percent and 10.52 percent respectively.
The yield however remained competitive when compared to similar investment products.
RBF noted that commercial banks’ time deposit rate was up by 31 basis points to 4.77 percent, and while yields varied across commercial banks, they were still below government bonds returns.
