The Fiji Times » Guarantee to ensure facilitation of government policies

The Fiji Development Bank (FDB) continues to hold the highest market shares with lending in the agricultural sector at 50.61% this fiscal year, Acting Prime Minister and Attorney General Aiyaz Sayed- said Khaiyum in Parliament.

He proposed that Parliament approve that – (a) the Government of Fiji guarantee the borrowings of the Fiji Development Bank (FDB) for the next 12 month period. From March 1, 2022 to February 28, 2023 through the issuance of short and long-term bonds, promissory notes, term deposits, any RBF funding facility and other short-term borrowings; (b) the government guarantees the sum of $200 million for the guarantee period; and (c) a guarantee fee of 0.075 percent be applied on a cumulative used guarantee credit.

He said that the FDB, which was under the supervision of the Reserve Bank of Fiji (RBF) from November 21, 2019 and as agreed, provided the semi-annual reports to the Minister of Economy.

He declared under section 16(3) of the Fiji Development Bank Act 1966.

“The repayment of sums borrowed under the provisions of this article and the payment of interest thereon may be guaranteed by the Government.

According to Mr. Sayed-Khaiyum, the 2022 government guarantee request from the bank would continue to facilitate Fijian government policy by lending to critical sectors of the economy, especially resource-based sectors, including; agriculture, mining and quarrying, manufacturing, transport, communications and storage and small and micro-enterprises, in wholesale, retail and hotels, sustainable energy from fossils to sources renewables and professional and business services that will help the disadvantaged in the community earn a decent livelihood.

This would also ensure that the bank lends to the natural resource sector, which would help the development of the agricultural sector and in the long term help the development of the Fijian economy.

This will also ensure that the bank’s borrowings are guaranteed by the Fijian government, thereby reducing the perceived risk associated with these borrowings, as they are taken on the open market.

Mr Sayed-Khaiyum said this would make the bank and its instruments more attractive to investors and should reduce the cost of borrowing for the bank.

“I think a lot of people might not understand that, but once the government guarantees, the ability to go to market to give investors that level of assurance, so they don’t necessarily demand high interest rates,” he said.

The 2022 government guarantee request from the FDB would secure the term deposits offered by the bank, which will boost investor confidence and thus force the bank to manage its own liquidity position as well.

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