The Reserve Bank of Fiji has removed the credit ceiling placed on banks in December 2006 effective from tomorrow.

The credit ceiling was implemented to prevent any capital flight in light of the political developments following the events of December 5th, 2006.

RBF Governor Sada Reddy said the lifting of the credit ceiling is possible as foreign reserves have now improved to comfortable levels and the decision will assist with the recovery of the economy.

However, Reddy said the guidelines given to commercial banks with respect to priority sectors will remain in place and they are asking the banks to strictly comply with these as they will be closely monitoring the banks.

The RBF also urges that as much as possible the financing of luxury imports is to be discouraged.

The RBF Governor also revealed that foreign reserves are currently around $920 million and the liquidity in the banking system is buoyant at around $260 million.

He said this easing in monetary conditions, as well as the removal of the credit ceiling, should support economic recovery as we move forward.

Reddy also revealed that consumer prices rose over the year by 2.2% in July compared to 2.3% in June and the lower prices in July was a result of much lower prices of energy related items relative to 2008, which have offset a large degree the recent price increases in other items.