April 7, 2009

Fund Transfer Cost $45million

www.fijilive.com Mon 06 April 2009

Repatriation cost Fiji National Provident Fund $45 million

06 APRIL 2009 SUVA (Pacnews) -----The repatriation of over F$300 million of offshore investment by the Fiji National Provident Fund (FNPF), which began in late 2005 and completed during the first half of its 2007 financial year cost it F$45 million (US$25 million).

In its recently released 2007 annual report, the country's only pension fund stated that the repatriation of its offshore funds was a result of a directive of the Reserve Bank of Fiji (RBF).

This is understood to be linked to Fiji's weak external reserves position, in which import bills have ballooned against a strained export earning ability, causing foreign exchange reserves to dwindle.

"A special KPMG Report on the reduction in investment earnings due to the Fund's repatriation exercise put the cost of this to FNPF at some F$45 million," FNPF CEO Aisake Taito told Fijilive.

The repatriation exercise reduced its offshore investments - held in equities and term deposits - to around two per cent of its F$3.14 billion investment portfolio in 2007.

Although the repatriated funds, reinvested in cash and fixed deposits locally, were exposed to very low interest rates initially, Taito said the recent interest rates environment is now favourable to these investments.

"Local banks are currently offering deposit interest rates of up to 8&#xpa; for terms from 1 to 12 months. You only need to refer to the Reserve Bank of Fiji (RBF) website to see that Fiji Government related borrowing rates are now quite attractive with 10 year term rates over 10 percent per annum, 15 year terms close to 11 percent per annum and 20 year terms at 12 percent per annum. These offer the Fund and its members a positive return over inflation," Mr Taito said.

FNPF experienced a drop in investment income by 42.7 percent from F$240.04 million in 2006 to F$138.08 million in its 2007 financial year, which ended June 31, 2007.

This was attributed to the "abnormally high capital gains and foreign exchange gains" experienced in 2006 when most of FNPF's offshore investments were liquidated.....PNS (ENDS)

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