Domestic long­term bonds, central bank independence in report

The independence of the central bank was highlighted in ­a recently launched compre­hensive report that explored Fiji's debt dynamics.

According to the report, which was commissioned by non-government organisation Pacific Network in Globalisation, "there (were) con­cerns around independence of the central bank and the powers given to the president under the law".

The Government could consider bond buybacks and bond switches to reduce pressure on its resources, the report by the regional non-gov­ernment organisation said, in rec­ommendations to domestic debt.

The report favoured long-term bonds over short-term treasury bills and urged the central bank to consider purchasing domestic gov­ernment bonds from primary and secondary markets.

Titled Debt Dynamics in Fiji: Im­pacts, Challenges and Strategies for Sustainable Economic Development - and commissioned by Pacific Net­work in Globalisation - the report makes bones about Fiji's debt.

"Central banks in some developing countries, such as Indonesia and Philippines, took this route to sup­port the financing needs of the gov­ernment and reduce the debt servic­ing pressures amid the economic crisis caused by the pandemic," the report said.

"Indonesia eventually passed the Financial Sector Development and Strengthening Law this year requir­ing its central bank to purchase government bonds in the primary market during crises in the future.

"This option should be exercised under only defined instances and in accordance with the principles of good governance, particularly transparency and accountability."

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