The Board of the Reserve Bank has approved further relaxation of exchange controls.

This comes into effect from 01 June.

Governor Ariff Ali said the changes are in line with the current strong performance of the economy and its favorable growth prospects moving forward.

Ali said that over the years, changes to exchange controls were made progressively in a sequenced programme, simultaneous with other economic and financial reforms.

The Governor said that tightening exchange controls at the onset of the COVID-19 pandemic in 2020 enabled the Reserve Bank to maintain foreign reserves at comfortable levels, restored confidence, facilitated business operations, and assisted economic recovery.

Ali said the changes include further increases in the delegated limits to commercial banks and foreign exchange dealers, the re-delegation of certain capital transactions that were pulled back in 2020, and the streamlining of documentary requirements for offshore payments.

These changes would facilitate operational efficiency for businesses and personal transactions.

Meanwhile, Ali says the Reserve Bank of Fiji has chosen to maintain its overnight policy rate at 0.25 percent.

Ali, who is also the chairman of the RBF Board, has expressed concerns about economic fragility, particularly after the International Monetary Fund downgraded its global growth forecast for 2023.

He states that domestic sectorial indicators are showing a softer performance, except for electricity production and total visitor arrivals, which increased significantly in the first quarter of 2022, largely due to more visitors from Australia, New Zealand, and North America.

RBF now expects visitor arrivals for 2023 to exceed previous projections, indicating a potential upward bias in the GDP growth forecast.

Despite this, uncertainties in policy and persistently high building material costs are likely to keep investment rates modest soon.

However, the RBF governor states that the banking industry’s capital remains adequate, while private sector credit increased annually in March, consistent with historically low lending rates and favorable economic conditions.

The RBF Board has agreed to continue with its accommodative monetary policy stance for the time being, but the RBF Governor warned that the overnight policy rate may be adjusted if necessary.