An agreement to boost investment in Fiji through the issuing of offshore Fijian dollar-linked bonds was reached between the Asian Development Bank (ADB) and the Fiji Government last week.

The agreement was made during a meeting between ADB’s Vice-President for Finance and Risk Management, Ms Ingrid van Wees and Fiji Attorney General and Minister for Economy, Mr Aiyaz Sayed-Khaiyum.

Under this initiative, the ADB will seek to mobilize Fijian dollar funding from international investors for investments in Fiji through a currency-linked structure. This means the ADB will sell bonds in Fijian currency to international investors and use the proceeds to offer local currency loans in Fiji, which will help to reduce foreign exchange risk for ADB's borrowers.

ADB Treasurer, Mr Pierre Van Peteghem said the ADB is delighted to support the development of Fiji’s capital markets.

“The initiative marks another milestone in ADB’s support for Fiji and our strategy of delivering local currency funding in developing countries.”

Mr Sayed-Khaiyum said international financiers have long recognized Fiji as an attractive destination for investment – a reputation that will be further bolstered by this new partnership with ADB.

“This ground-breaking initiative removes the financial risks and costs associated with overseas currency transactions and conversions. As a result, it will cultivate a more business-friendly bond market and most importantly, free up more funds for an infusion of private sector investment right here in Fiji.”

ADB is a regular borrower in mainstream international bond markets but has also led issuance in developing Asian countries as part of its efforts to promote domestic bond markets as an alternative to bank lending. Overall, ADB raised more than $23.5 billion from the capital markets in 2018.

The ADB was established in 1966 and is owned by 68 members – 49 from the region.