The total contingent liabilities of the government stood at $1.7 billion in 2009 and the government must stop guaranteeing loans for institutions which becomes a liability to the State.

Reserve Bank of Fiji Governor Sada Reddy while addressing delegates at the Fiji Institute of Accounts Conference stressed that this level of contingent liabilities is extremely high given the weak revenue base of government.

Reddy said this trend must stop because what it does is that without government really knowing what is going on in the institutions whose debt government has guaranteed, and suddenly the government is faced with those contingent liabilities coming on to the governments books and seriously compromising government finances.

He said there are numerous instances in the past where government had to step in to bail out the institutions, because of the guarantee.

Highlighting the National Bank of Fiji saga which cost taxpayers $372 million in total, Reddy said there are signs that few other institutions whose debt government has guaranteed may not be in a position to meet their obligations.

Reddy said this situation must not be allowed to continue.

The RBF Governor stated that government must carry out proper due diligence on statutory corporations which seek guarantees and if such organisations are not properly managed, government must put conditions to any guarantees it gives in future so that proper reforms are done to make these institutions financially viable so they can borrow on their own strength in the market.

Meanwhile, Reddy also said that a number of people have been commenting on the US$150 million bond issued in September 2006 and is due for repayment in September 2011.

Reddy said the concerns are rightly so as to whether Fiji has the capability to repay the loan.

However, he assures that the government and the RBF are actively exploring all possibilities to meet this repayment and Fiji as usual will meet all its foreign obligations whatever it takes.