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Friday, March 02, 2007

Revised National Budget 2007 : Interest rates to fall

The Interim Minister for Finance has announced Government's Revised National Budget for 2007. As part of measures to boost the economy and ensure that there is sufficient funds for investment, Government has announced that the Reserve Bank of Fiji will now be looking at injecting liquidity into the financial system.

Such a move will result in downward pressure on interest rates to boost economic development as well as to ensure that there the financial system has sufficient funds to put into investment projects. We will, therefore, expect banks' interest rates to fall over the immediate term.

I had, in earlier posts, mentioned that Reserve Bank of Fiji's monetary policy stance was not doing the economy much benefit with its interest rates hikes over the last two years. This has lead to hardships for ordinary citizens through higher lending rates, lack of funds for investment projects for both domestic and foreign investors, with banks the only ones gaining as evidenced by their high profits over the last financial year.

Such a move will definitely help kick-start the economy and would be a good sign to individuals, businesses and investors alike.

More on the Government Revised National Budget 2007 later.

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