Parliament has unanimously approved that the Government guarantee Fiji Development Bank’s borrowings for 12-months from 1 March 2024 to 28 February 2025.
This will be done through the issuance of short and long-term bonds, promissory notes and Reserve Bank of Finance financing facility and other short-term borrowing.
Parliament also approved that the Government guarantee for a sum of $130 million for the guarantee period and that the Bank pay a guarantee fee of 0.075 percent on the cumulative utilised guarantee.
Speaking on his motion, Deputy Prime Minister and Minister for Finance Professor Biman Prasad said the function of FDB is to facilitate and stimulate the promotion and development of natural resources, transportation and other industries and enterprises in Fiji and in the discharge of these functions.
He said FDB shall give a special consideration and priority to economic development of the rural and agricultural sectors of the economy of Fiji.
Prof Prasad said FDB is under the supervision of the Reserve Bank of Fiji and this requires the Bank to provide a six-monthly report to the Minister of Finance – Also as required under section 2(1) of the Financial Management Act which state that subject to any other Act that the Government may guarantee the financial liability of an entity in respect of a loan or otherwise but only if the giving of the guarantee is approved by Parliament.
The Government guarantee requests from the Bank are:
- To continue the facilitation of the Government’s policy by lending to essential sectors of the economy particularly resource-based sectors including agriculture, mining and quarrying, manufacturing, transport, communications, storage, small and micro enterprises, wholesale and retail in hotels, sustainable energy from fossils to renewable sources and professional and business services which will assist the disadvantaged community to earn a decent livelihood
- To lend to the resource-based sector that will assist in the development of the agriculture sector and assist the development of the Fijian economy in the long run
- Continue provision of finance that can support the growth of the nation’s economy and improve the standard of living for the people as well as improving the social economic status by assisting them with their needs in making the correct investments
- Ensure that the Banks borrowing are guaranteed by the Government, therefore reducing the perceived risks associated with such borrowings. This will make the banks instruments more attractive to investors and should reduce the cost of borrowing to the Bank.
Prof Prasad said the Bank’s Lending Portfolio; the Banks Audited Financial Statement as at December 2023 recorded an accumulative total loan portfolio of $482.7 million.
Leader of Opposition, Inia Seruiratu in his contribution to the motion said they fully support it based on three reasons – That FDB is a development bank and the key things about a development bank are providing long-term financial support and the two keys words are to support projects and most importantly, the sectors.
Seruiratu said it is important to diversify the economy.
He said FDB’s main objective is to facilitate and stimulate the promotion and development of natural resources, transportation, and other industries and enterprises in Fiji, and to give special consideration and priority to the economic development of rural and agricultural sectors of the economy.
Deputy Prime Minister Viliame Gavoka said the Government guarantee of $130 million to the Fiji Development Bank is to provide finance for the development of the country.
Gavoka said the Government wants the Bank to succeed – There are two parties to the bank; those that manage the bank and those that borrow.
He said the Government is critical for the economy of this country and critical for FDB.
