Financial Sector Oversight

Fiji should persist in strengthening financial sector oversight, particularly for banks with high non-performing loans, and continue enhancing financial infrastructure to boost inclusion.

This is stated in IMF’s Article IV Staff Country Report released in Washington on Monday.

“The banking sector is sound although high NPLs (non-performing loans) at some banks are a concern,” the IMF stated.

“The banking sector is well capitalized, liquid, and profitable.”

“NPL-to-total loans ratios have improved but remain elevated relative to pre-pandemic levels, and the adequacy for provisioning for NPLs merits continued attention.

“Some vulnerabilities remain from high NPLs at certain banks, as well as perhaps from recent margin compression amidst heightened competition.”

The IMF stated authorities should continue to strengthen financial sector oversight, including evaluating credit risk management, intensified on-site supervision, and ensuring adequate provisioning.

“With (IMF) Fund support, the authorities are currently reviewing the Fiji Banking Act (expected to be completed by December 2024) and the Credit Union Act.’

“However, the authorities still need to address remaining recommendations from the 2018 Financial Sector Stability Review (FSSR), including the review of the RBF Act (plans are expected by mid-2025) and the expansion of RBF’s supervision remit to cover non-bank financial institutions (NBFIs), such as the Housing Authority.”

This article first appeared in The Fiji Times