Former Reserve Bank of Fiji Governor Savenaca Narube. Photo PINA
Former Reserve Bank of Fiji governor Savenaca Narube has warned that persistently high banking system liquidity remains a “worrying” sign of an economy operating below potential and a financial sector not fully channelling funds into productive investment. Writing on 17 November 2025, Narube estimated surplus liquidity at around $2.2 billion and linked it to buoyant foreign reserves and subdued demand for new loans.
He argued that banks have had little incentive to reduce idle cash holdings because profits remain high, with excess funds often redirected into government bonds rather than private-sector lending. The dominance of the Fiji National Provident Fund (FNPF), whose assets exceed those of all commercial banks combined, adds another layer of complexity, as banks must factor in the risk of large, rapid movements of funds by the pension giant.
Narube’s central concern is that the combination of high liquidity and low credit growth reflects “sluggishness of the economy”, with investment, jobs and incomes all constrained. He argues that without a broad programme of economic and financial reforms aimed at lifting trend growth to around five per cent a year, the situation is likely to persist.
The article also references a parliamentary standing committee finding that interest rates on government bonds have remained stagnant since 2020, partly because of excess liquidity. Separate commentary from former business owner Mike Towler links the environment to near-zero deposit rates, but warns that encouraging large-scale offshore investment as a quick fix could trigger destabilising capital flight.
For businesses, Narube’s analysis highlights a paradox: cheap money on paper, but a slower-than-desired translation into credit for new ventures. How policymakers and regulators reconcile the need for financial stability with stronger incentives for lending and investment will be a key determinant of Fiji’s medium-term growth path.
