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CENTRAL BANK OF MALAYSIA &

ASIAN DEVELOPMENT BANK

ASIAN REGIONAL PUBLIC DEBT MANAGEMENT


FORUM, MALAYSIA
3-5 NOVEMBER 2009

SESSION 4: DEVELOPING DOMESTIC


GOVERNMENT SECURITIES MARKET – THE FIJI
EXPERIENCE

MACIUSELA N LUMELUME
MINISTRY OF FINANCE
REPUBLIC OF THE GOVERNMENT OF THE FIJI ISLANDS
LOCATION OF FIJI?

•Archipelago of around 330 islands in the Pacific Region ; 2,700 kms East of Australia;

•US$3,343.7 per capita income; Population of 827,900 (57% Fijian/37% Indians);


PRESENTATION
OVERVIEW
GOVERNMENT OF FIJI
THE INTENT

‰ Peoples Charter for Change, Peace & Progress -


“Better Fiji For All”
¾ Pillar 5 of 11 – Achieving Higher Economic
Growth While Ensuring Sustainability
‰ Roadmap for Democracy and Sustainable Socio-
economic Development (2009-2014)
¾ Chapter 3 - Economic Development - Policy
Objectives , Strategies, & KPI
o Financial Services
FIJI’S
ECONOMIC CONDITION,

Variables Average Medium Year end


Since 2000 Term 2009
Target

GDP Below 2% 5% -0.3%


Growth
Inflation 3% 3% 9%

Net Deficit -3% Balanced 2.5%


Budget

Investment 9% 25% 5%
FIJI’S FINANCIAL MARKETS ,
STRUCTURE

‰ Money Market
™ Interbank

™ Foreign Exchange Market

™ Treasury Bills & PN

‰ Capital Market
™ Bond Market

™ Stock Market/Equity
FINANCIAL MARKET,
SYSTEM & SIZE
FINANCIAL SYSTEM,
PLAYERS
1. Reserve Bank of Fiji ( Regulator/Supervisor)
™ Banking Industry
– Banks (5/4)
– Credit Institutions (3)
– AMB
™ Insurance Industry
– Insurers (9)
– Intermediaries - Brokers (5), Agents (368)
– Insurance Trust of Fiji and FAI
™ Superannuation Industry
– Fiji National Provident Fund (FNPF)
™ FX Dealers Industry
– Restricted FX Dealers (8)
– Money Changers (3)
FINANCIAL SYSTEM,
PLAYERS
3. Capital Markets Development
‰ Formerly the Capital Market Development
Authority (CMDA) & now the Financial
Institutions & Compliance Group under
RBF

™ Licensed brokers (3)

™ Dealers (2)

™ Licensed Investment Advisers (30)

™ Unit Trust (6)

™ South Pacific Stock Exchange (16 COYS)


FINANCIAL MARKET,
MONEY MARKET
DEVELOPMENT
‰ Relatively well developed Money Market
™ Numbers of players

™ Specialisation – Customer Service

™ Number of Branches

™ Wide Range of Products

™ Forwards & Swaps

™ Rural Banking

™ Modernisation - ATMS, EFTPOS, Internet &


Phone Banking, FIJICLEAR (RTGS)
FINANCIAL MARKET,
BOND MARKET
DEVELOPMENT
‰ Money Market vs. Bond Market
™ Developed vs. basis foundation to deepen the
bond market

‰ Roles of key market players


™ Government of Fiji

™ Reserve Bank of Fiji (RBF)

™ Fiji National Provident Fund (FNPF)

™ Life Insurance, Private & Public Companies

™ South Pacific Stock Exchange (SPSE)


FINANCIAL MARKET,
BOND MARKET
DEVELOPMENT
CURRENT STATUS
FINANCIAL MARKET,
FIJI GOVERNMENT, DEBT
MANAGEMENT PRACTICE

‰ Performance

™ Maintaining Debt Ratio around 50 percent

™ Credible Debtor

™ Developed Domestic Market

™ Successful floatation of the first Global Bond


in September 2006

™ Prudent Cashflow & Forecasting


Management
FINANCIAL MARKET,
FIJI GOVERNMENT, DEBT
MANAGEMENT PRACTICE

‰ Challenges

™ Heavy reliance on FNPF

™ High volatility in interest rates

™ Increase in Contingent Liabilities

™ Secondary bond market is inactive


FINANCIAL MARKET,
FIJI GOVERNMENT, DEBT
MANAGEMENT PRACTICE

‰ Key Medium Term Strategies


™ To reduce debt below 50% of GDP

™ Effective cashflow & forecasting management

™ Tightening of contingent liability guidelines


and regulations

™ Deepening the Bond Market


FINANCIAL MARKET,
FIJI GOVERNMENT, DEBT
MANAGEMENT PRACTICE

‰ Key Long Term Strategies


™ Transfer the Registry functions to Ministry of
Finance

™ Open the domestic capital market to


international market

™ Use swaps, derivatives as financing options


for deficit financing
FINANCIAL MARKET,
DEEPENING THE BOND
MARKET

‰ Review Legislations Impacting the


Market
™ Enabling Legislations

‰ Public Bond Awareness


™ Financial Literacy

™ Financial Outreach

‰ Size of FNPF

™ ¾ of the market

™ Demonopolisation
FINANCIAL MARKET,
DEEPENING THE BOND
MARKET

‰ Liquidity of Instruments

™ “Buy & Hold”

™ Dormant to a Liquid Secondary Market

‰ Narrow investor base limited to few


institutional investors

™ Retail Bond - small individual investors

™ Benchmark Bond – creates liquidity & promote


secondary market trading
ASSISTANCES

‰ Technical Assistances (T/A)


™ Asian Development Bank (ADB) – Pacific
Development Member Countries (PDMC)
™ Pacific Economic Management T/A

™ International Monetary Fund (IMF) - Pacific


Financial Technical Assistance Centre (PFTAC)
™ Public Financial Reform T/A
Thank You