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Macroprudential policy

Filipe Naigulevu
Saturday, February 10, 2018

THE International Monetary Fund (IMF) has raised the need for Fiji to strengthen macroprudential policies and intensify financial supervision, including on non-bank institutions.

This, the IMF stated, was to contain financial stability risks given the rapid credit growth in recent years.

As part of its executive board assessment from the 2017 Article IV consultation with Fiji concluded earlier this week, the IMF has also encouraged the authorities to pursue fiscal consolidation over the medium term to reduce procyclicality and maintain fiscal sustainability.

The IMF executive board also underscored the importance of improving data quality and its timely dissemination to better guide policymaking.

While they considered the expansionary fiscal stance in fiscal year 2017-2018 as appropriate to support the reconstruction efforts, they noted that fiscal buffers, including pension savings, should be rebuilt in the medium term.

This is to help Fiji remain resilient to adverse shocks and to place debt on a downward path.

The board also recommended broadening the coverage of government operations in the budget, increasing the reporting frequency of fiscal outturns and efforts to continue strengthening the AML/CFT framework.

Meanwhile, the IMF executive board commended the structural reforms undertaken by the authorities and emphasised the importance of implementing measures to boost private investment.

The board also encouraged continued efforts in improving the business environment, including re-establishing a credit bureau with an adequate regulatory framework, upgrading leasing mechanisms to use land more efficiently, and rationalizing price controls to improve the allocation of resources.

It also noted that real GDP was at 3.8 per cent last year while it is projected for 3.5 per cent this year.

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