Improvement in incomes evident by the 9.7 per cent in Pay As You Earn collections up to May and the increments in the minimum wage rate have boosted consumption activity.
The Reserve Bank of Fiji, in its June economic review stated that net value added tax (VAT) rose by 50.6 per cent relative to last year aided by higher import (+44.5 per cent) and domestic (+21.6 per cent) VAT collections.
The review also highlighted the 37.6 per cent increase in total vehicle registrations in sync with the overall improvement in banks’ new consumption lending (+64.5 per cent).
According to the RBF, the financial sector remains conducive to economic recovery whereby credit to the private sector rose by 2.6 per cent over the year on the back of increased lending by commercial banks’ (+5.5 per cent) to business entities and households.
It said the injection of additional liquidity through the RBF special facilities and higher foreign reserves inflows have propped up liquidity of $2.4 billion in the banking system kept interest rates low.
While the annual inflation stood at 5 per cent in May, the year-end inflation at this juncture is still forecast to reach 5.0 per cent, with some upside risks to be considered in the upcoming review post the National Budget this month.
