Hopes are high that the inflation rate will drop to about 5 percent by the end of this year.

This has been revealed in the 2009 Reserve Bank of Fiji Annual Report.

RBF Governor Sada Reddy said although inflation rose from the effects of the devaluation, the 6.8 percent inflation recorded in December 2009 was well within initial expectations.

Reddy also said that as anticipated, inflation peaked in April this year at 10.5 percent and eased recently to 5.4 percent last month.

There are also high expectations as far as the overall performance of the economy and foreign reserve levels are concerned.

The RBF Governor said the first 4 months of last year saw Fiji going through a particularly tough period economically, as foreign reserves fell sharply to a low $430 million and liquidity plunged to below $20 million.

He said following the 20 percent devaluation and the IMF's Special Drawing Rights Allocation, foreign reserves turned around to a comfortable level of $1.091 billion by the end of December.

Reddy said foreign reserves continue to perform well and are currently around $1.160 billion, worth around 3.7 months of imports of goods and non-factor services.

Meanwhile the RBF also transferred a total of $39.2 million to the government.

This comprised it's entire profit of $16.6 million in the financial year ended 2009 and one fifth of the balance of the Revaluation Reserve Account of $22.6 million.


Story by: Vijay Narayan