Politics

There Was Liquidity Shortage in Fiji : Westpac

Westpac Bank has said that there was a liquidity shortage in the country earlier this year.

The comments came as a response to Fiji’s Economy Minister Aiyaz Saiyed Khaiyum after he accused the bank of sucking in large deposits in the banking sector.

During a Parliammentary sitting on Tuesday Mr Khaiyum said that there was rumor of Westpac selling down it’s Fijian operations.

“There was, of course, a rumour going around that Westpac was in the process of selling down its Fijian operations. If for example I want to sell my business, I will make my balance sheet look good and one of the ways is to suck in as much deposits as possible. It was quite telling some months back that Westpac was offering very high-interest rates for deposits. That led to huge scramble for the liquidity in the market with the banks.”said Mr Khaiyum.

Opposition Whip Lynda Tabuya created alot of controversy in the country after she claiming Fiji’s liquidity was alarming low.

Meanwhile, Minister for Economy Mr Aiyaz Saiyed Khaiyum and the Governor of the Reserve Bank Mr Arif Ali has repeatedly claimed that liquidity was sufficient for the economy.

Minister for Economy brushed aside Ms Tabuya’s claimearlier this year by stating that there has been a significant flow of misinformation on Fiji’s bank liquidity situation, and the record needs to be corrected.

NFP Leader Professor Biman Prasad says remarks made by the Governor of the Reserve Bank of Fiji in defence of liquidity levels and economic growth are misleading and far from the reality. 

“The RBF Governor is reported to have told both an economics workshop at University of the South Pacific last Friday and the Fiji Chamber of Commerce economic summit on Monday that there was no liquidity crisis”.

“The Governor said RBF had the authority to reduce its statutory deposits to zero (0) percent to allow liquidity to jump from the current level of $347 million to $1 billion if the need arises”.

“This is a highly irresponsible and illogical statement, similar to the Governor’s earlier statement of last month that there was enough money on RBF vaults to last for 5 years”.

“The Governor’s loose political talk is camouflaging the reality. He knows that his statements in defence of liquidity and the economy are illusory”.

“And he knows that the truth is that commercial banks are offering interest rates of as high as 6% to attract term deposits to boost liquidity levels. He also knows that because of this reason, commercial banks have increased lending rates”.

Opposition members have come-up with “economic crisis” and “economic doom” theories.

Liquidity measured by banks’ demand deposits averaged around $360.1 million in April. As at 29 May, liquidity was $329.7 million. It later rose to $551 million in August of this year.

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