Fiji central bank tightens FX controls to protect reserves

SUVA - Fiji’s central bank tightened exchange controls on Tuesday in a move to safeguard foreign reserves, as the military government imposed emergency regulations in the unstable South Pacific island nation.

By (Reuters)

Published: Tue 14 Apr 2009, 11:33 AM

Last updated: Thu 2 Apr 2015, 3:35 AM

Fiji has been plunged into a political crisis after the country’s president reappointed former coup leader Commodore Frank Bainimarama as interim prime minister on Saturday, less than two days after a court ruled his 2006 coup illegal.

The Reserve Bank of Fiji said on Tuesday tighter exchange controls would be effective immediately.

“This move is in line with one of the bank’s core objectives of safeguarding our foreign reserves,” Sada Reddy, deputy governor of the Reserve Bank of Fiji, said in a statement.

Reddy did not detail the controls, but said some facilities would be suspended, others would require central bank approval and some transactions would continue but at lower limits.

Official foreign reserves at the end of February stood at 674 million Fiji dollars ($384 million), equivalent to around 2.7 months of imports of goods.

The former British colony has suffered four coups and a military mutiny since 1987, fuelled by tensions between indigenous Fijians and economically powerful ethnic Indians.

Australia and New Zealand have called Bainimarama’s reappointment a “military dictatorship”, with troops controlling the country’s media and government offices.

Security forces reportedly took over the central bank office in the capital Suva on Tuesday, with media reports that the central bank governor Savenaca Narube had been sacked.

Fijian news outlets have been barred from publishing news that would cause “disorder” or “public alarm”, while the security forces have been deployed to news bureaus throughout the country to prevent news critical of the government.

“Things have reached an unpredictable stage, some sort of crackdown is underway,” New Zealand Foreign Minister Murray McCully told reporters in Wellington.

President Ratu Josefa Iloilo said Bainimarama, who came to power in a bloodless coup in 2006, should hold elections by September 2014. Bainimarama had promised to hold elections in 2009, but broke the commitment, saying the electoral system was racially divisive.

Australia said on Tuesday that it would push for international sanctions against Fiji’s military government, while New Zealand said it was considering trade sanctions.

Fiji’s tourism and sugar export-based economy is projected to contract by 0.3 percent in 2009, compared with an expansion of 2.4 percent in 2008, due to the major floods earlier in the year and the global financial crisis.

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