The RBF is established as an independent institution under the RBF Act (1983) and is fully owned by the Government of Fiji. The functions and duties of the Reserve Bank are specified in the RBF Act (1983), RBF (Amendment) Decree 2009, the Banking Act (1995), the Insurance Act (1998), the Exchange Control Act (Rev. 1985), the Financial Transactions Reporting (FTR) Act (2004), Payment and Settlement Systems Oversight Regulations (2004), the Fiji National Provident Fund Decree (2011), the Companies Act (2015) and the Fair Reporting of Credit Act (2016).
Section 153 of the 2013 Constitution of the Republic of Fiji also states: –
(1) The RBF is the central bank of the State, whose primary objects are: –
a) To protect the value of the currency in the interest of balanced and sustainable economic growth;
b) To formulate monetary policy;
c) To promote price stability;
d) To issue currency; and
e) To perform other functions conferred to it by a written law.
(2) In pursuing its primary objects, the RBF must perform its functions independently and without fear, favour, or prejudice, but there must be a regular consultation between the RBF and the Minister responsible for Finance, Strategic Planning, National Development & Statistics.
(3) The powers and functions of the RBF are those customarily exercised and performed by central banks.
(4) The Governor of the Reserve Bank of Fiji shall be appointed by the President on the advice of the Constitutional Offices Commission, following consultation with the Minister responsible for Finance, Strategic Planning, National Development & Statistics.
(5) A written law must provide for the composition, powers, functions and operations of the RBF.
(6) The RBF must deliver quarterly and annual reports to Parliament, and any other reports when required by law, or requested by resolution. The RBF’s performance is documented in an Annual Report and tabled in Parliament every year. Under section 56(1) of the RBF Act, the Annual Accounts and a Report of Operations of the Bank must be submitted to the Minister for Finance, Strategic Planning, National Development & Statistics within three months after the end of the financial year. Under the Insurance Act, the Insurance Annual Report is published annually on a calendar year basis and must be submitted to the Minister for Finance, Strategic Planning, National Development & Statistics by 30 June of the following year. The Financial Intelligence Unit (FIU) and Financial Inclusion Annual Reports are also published annually on a calendar year basis.
The Vision of the Bank is “Leading Fiji to Economic Success” and is supported by the Mission statements and a set of Values.
The Governor is the Bank’s Chief Executive Officer and is responsible to the Board for the management of the Bank and the execution of its policies. Mr Ariff Ali was appointed as the Governor of the Reserve Bank of Fiji with effect from 11 September 2017 for a five-year term. Prior to being confirmed as the Governor, he served as the Deputy Governor with effect from 27 May 2014 and was later appointed as acting Governor on 28 May 2017.
Board of Directors
The Board comprises the Governor, who serves as the Chairman, the Permanent Secretary of the Ministry of Finance, Strategic Planning, National Development & Statistics, as an ex-officio member, and five other non-executive members. Under the RBF Act, the Minister for Finance, Strategic Planning, National Development & Statistics appoints the Directors. The Directors may hold office for a period not exceeding three years but are eligible for re-appointment. Ms Makereta Konrote, Permanent Secretary for Finance, Strategic Planning, National Development & Statistics, is an ex-officio member appointed on 11 January 2016. Other Board Directors holding office as at 31 July 2019 were Mr Pradeep Patel, Mr Tevita Kuruvakadua and Mr Tony Whitton (OF).
Under the RBF Act, the Board is required to meet at least ten times in a calendar year. Four Directors form a quorum for a meeting of the Board. In the absence of the Governor, the Deputy Governor may participate in the Board meetings and is entitled to exercise a vote. The Board met on 12 occasions during the review period.
The RBF has two Board Committees – the Audit and Risk Committee and the Governance Committee, which comprise non-executive members. Decisions of the Committees are submitted to the Board for ratification. Mr Pradeep Patel is the Chairman of the Board Audit and Risk Committee while members include Mr Tevita Kuruvakadua and Ms Makereta Konrote. The Board Audit and Risk Committee monitors the adequacy of the audit function in the Bank and assists the Board in fulfilling the requirements of the RBF Act in relation to the Bank’s accounting and reporting practices. In carrying out these functions, the Committee:
• Reviews and monitors the functions of the external and internal auditors;
• Evaluates the Bank’s accounting control system by reviewing audit reports and monitoring management’s responses and actions to correct any noted deficiencies;
• Reviews accounting policies to ensure compliance with laws, regulations and accounting standards; and
• Reviews the annual financial statements of the Reserve Bank.
During the financial year, the Board Audit and Risk Committee met on five occasions.
The Board Governance Committee is chaired by Mr Tevita Kuruvakadua and members are Mr Pradeep Patel and Mr Tony Whitton (OF). The role of the Board Governance Committee is to strengthen the governance of the Bank and to ensure the accountability of the Office of the Governor to the Board. The main functions of the Committee are to oversee compliance with the Bank’s Corporate Governance Charter and to undertake the annual performance appraisal of the Governor and Deputy Governor based on agreed key performance indicators (KPIs). Board members who are not members of the Board Governance Committee are invited to attend the meeting to assess the performance of the Governors.
Since 2013, the Board has undertaken an annual assessment of its own performance as well as that of its two Committees. From 2017, the Executive Management has also carried out a performance assessment of the Board Directors on an annual basis. In the review period, the Board undertook an assessment of the Bank’s internal and external auditors. The Board will continue to monitor the performance of its Committees and the auditors annually. In addition, the Board Governance Committee reviews and approves strategies on terms and conditions of employment for Executive Management and staff. The Committee also reviews and approves strategies on the remuneration policy for all staff. The Board Governance Committee met four times during the review period in the 2018-19 FY.
The Executive Management of the Reserve Bank comprises the Governor, Deputy Governor and all Heads of Group. The Governor is advised by a number of internal committees within the Bank:
• the Executive Management Committee meets fortnightly to consider the management and day-to-day operations of the Bank;
• the Monetary Policy Committee meets monthly, or more often as necessary, to discuss economic and monetary developments;
• the Market Operations Policy Committee meets monthly to discuss the Bank’s domestic markets operations;
• the Financial System Policy Committee meets monthly to review financial system soundness and efficiency;
• the Investment Committee meets monthly to provide strategic direction and oversight of the Bank’s domestic and foreign investments;
• the Financial System Development Policy Committee meets monthly to discuss financial system and capital markets developments, payment systems, financial inclusion and consumer issues including complaints management;
• the Currency and Corporate Services Policy Committee meets quarterly to discuss issues relating to currency and internal services;
• the Information Technology Steering Committee (ITSC) meets quarterly to discuss IT development and operations; and
• the Risk and Business Continuity Management Committee meets quarterly to identify and assess risks and their impact on the business of the Bank, formulate effective strategies to address these risks as well as respond, manage and recover from any incident or crisis faced by the Bank. The Governor chairs all these Committees. Delegation of Authority All activities and expenditure in the Bank must be authorised in accordance with the respective delegations, policies and procedures. The Board receives monthly reports comparing the actual outcomes against budget. The Code of Conduct policy provides guidance on compliance to ethical standards. The Declaration of Compliance, signed annually by all staff, provides assurance that they have complied with the Code of Conduct, Delegation of Authority, Internal Rules and Orders and all internal policies of the Bank.
The Governor chairs all these Committees.
Delegation of Authority
All activities and expenditure in the Bank must be authorised in accordance with the respective delegations, policies and procedures. The Board receives monthly reports comparing the actual outcomes against budget. The Code of Conduct policy provides guidance on compliance to ethical standards. The Declaration of Compliance, signed annually by all staff, provides assurance that they have complied with the Code of Conduct, Delegation of Authority, Internal Rules and Orders and all internal policies of the Bank.
The Delegation of Authority is updated regularly to ensure that it is current.
The Bank’s 2014-18 Strategic Plan guided the operations and outputs of the Bank throughout the FY, which are linked to its 2018-19 annual work plan. Heads of Group are responsible for ensuring that planned outcomes are achieved. A review of how the Bank was progressing in terms of the implementation of the 2014-18 Strategic Plan was undertaken in February 2019. Some re-prioritisations were approved during the year as the Bank diverted resources to outputs needing urgent attention. The RBF 2014-18 Strategic Plan end date was extended to August 2019, to be in line with the Bank’s Work Plan cycle and conform with Government’s planning cycles, which is from August to July. The Bank’s next Strategic Plan is from 1 August 2019 to 31 July 2024.
A robust strategic planning process was initiated early with numerous sessions engaging key stakeholders for the review and completion of the previous plan and strategising for the next Strategic Plan. A survey was also carried out to obtain stakeholder feedback and assess the organisation’s functions to enhance its role further. New initiatives in the lead up to the Strategic Plan review process included a bottom-up and topdown approach to discussions. Consequently, the vision of the Bank was retained as majority of the staff maintained it was still relevant, while the mission statements of the Bank were enhanced to suitably reflect the evolving role of the Bank. An important aspect of the new Strategic Plan is the reinforcement and further development of the culture of excellence by placing a high emphasis on innovation. Success will depend on finding capacity, that is, the right people with the right tools and the time needed to achieve the strategic priorities in the Plan.
The August 2019-July 2024 Strategic Plan was approved by the Board in July 2019. Monitoring tools were also developed to ensure that there are regular reviews of the plan and reporting to the Board. Chief Managers are responsible and accountable for implementing this Strategic Plan.
Annual Corporate Planning Cycle
Corporate planning is undertaken annually in the Reserve Bank. The initial formulation of the Bank’s work plan for the new fiscal year commences in December. The Work Plan is developed and presented according to the mission statements of the Bank. Every strategy, output and process must identify with a mission statement, which in turn will contribute to the achievement of the Vision of the Bank. Each mission statement has a list of Key Result Areas that aligns to individual KPIs.
In January, the Group strategies were reviewed and the changes were approved in February. Groups reviewed their work progress for the first six months of the fiscal year (August-January) and a report was submitted to the Board.
From February to March, extensive discussions were then held on the new annual work plan. Each Group held an interactive planning workshop and feedback was obtained from both internal and external stakeholders on suggested areas to be considered by the Bank in preparing its annual work plan. Once the annual work plan for the next financial year was established, it was presented to the Board, together with the annual budget for approval in June. In developing the 2019-20 Annual Work Plan, apart from the typical annual outputs, deliberate commitment was made to ensure that the strategic deliverables for year one of the Strategic Plan were clearly identified and incorporated so that these could be accurately monitored and delivered as planned.
The Bank uses zero based budgeting in determining the necessary financial resources for the coming year, based on the work plans submitted by the Groups. In June 2019, the Board approved the annual work plan and budget for the period 1 August 2019 to 31 July 2020.
The Bank is committed to ensuring that effective risk management remains central to all its activities. The Bank regularly assesses its control environment and has in place a risk management framework which comprises a comprehensive list of policies and procedures and a Corporate Risk Register. These enable the Bank to effectively manage inherent and emerging risks to economic growth and stability of the financial system. The Bank continues to strengthen its risk management framework. The Bank’s primary risks are those directly related to its core mandates of price stability and financial stability.
The Bank identifies risks and implements controls in its operation and management of foreign reserves holdings. Other financial risks that the Bank manages include liquidity risk, credit risk and market risk. Risks related to work processes and inadequacies in human resources are important to the Bank in ensuring the efficient management of its operations. Ongoing quality management initiatives and capacity building continued to be the focus of the Bank’s development programme.
The Bank began to review its Risk Management Framework in the latter part of 2018 to ensure its continued alignment with the latest standards in risk management practices and relevance to global and domestic developments. As part of this review, the Bank introduced a Social Media Policy, updated the risk appetite statement and commenced updating all the policies within the framework. Incident Reporting is part of the Risk Management Framework of the Bank. A reporting framework is in place for reporting incidents and monitoring is ongoing to ensure that all incidents reported are resolved, with lessons learnt recorded for future reference.
The Bank’s Business Continuity Plan (BCP) remained in place during the year. The BCP framework includes a Business Resumption Site (BRS) as backup for critical operations should the Reserve Bank’s main building become inaccessible due to an emergency or a disaster or if the systems in the building become inoperable. Critical operations include foreign reserves management, finance management, settlements and some domestic market processes, including FIJICLEAR operations. The BRS also houses the Bank’s archives. Best practice requires that BCP procedures are regularly tested to ensure their effective readiness for emergency situations. The Bank’s crisis communication procedures are established and practised through call trees and emergency evacuation drills continue to ensure awareness of emergency procedures by staff and tenants of the RBF building.
The Bank participated in the National Tsunami Drill with other corporates to raise staff familiarity with the evacuation processes and will continue to conduct such training and drills to enhance disaster preparedness and planning. The Risk Management and Communications Group forms the second line of defence in the management of risks in the Bank and its Middle Office is responsible for managing risks relating to the Bank’s foreign reserves management operations. Compliance and performance reports are prepared by the Middle Office and discussed at the Investment Committee meetings held monthly.
The audit function as a third line of defence under the Bank’s risk management function continued to provide independent assessments to ensure the effective oversight of risks in the Bank. The internal audit function is outsourced to KPMG Fiji while external audit is undertaken by PricewaterhouseCoopers Fiji. Areas for improvement identified by internal and external audits are addressed as appropriate. The Board, the Board Audit and Risk Committee, the Board Governance Committee and the Risk and Business Continuity Management Committee also contribute to the review and strengthening of the Bank’s risk management function.
Corporate Governance Policy
1.1 The Reserve Bank of Fiji (“Bank”) has the primary responsibility to practice good corporate governance as stipulated in the Constitution as well as promote a sound financial structure, which includes carrying out its duties in the interest of the country and the people of Fiji as reflected under Part IV of the RBF Act (1983). In this regard, the Bank is guided by its corporate governance policy and puts the utmost priority on good governance, ensuring independence, accountability and transparency in carrying out its duties.
1.2 The objective of the Policy is to: (1) ensure the implementation of an effective corporate governance framework that is consistent with the Bank achieving its mandate; (2) guide long term prosperity and value development for the organisation; (3) preserve the interest of and exercise responsibility and accountability to relevant stakeholders.
1.3 The Bank is committed to ensuring that effective good corporate governance remains central to its activities, forms its foundation and hence is a core management competency. The aim is to ensure that good governance is embedded in the Bank’s processes and culture, thus contributing to the achievement of its core objectives and value creation over time.
2.0 Corporate Governance Strategy
2.1 At the Bank, Good Corporate Governance is about placing utmost priority to being ethical and accountable in all conduct, in order to protect and maintain the RBF’s independence and credibility, and ensure transparency in its actions.
2.2 The three pillars of corporate governance that the Bank aligns to are: independence, accountability and transparency, which support the basis for the legal framework of the Bank as enshrined in the Constitution of Fiji. In this sense, the Bank identifies, assesses and has governance oversight at several levels including Board, management and staff.
2.3 At the Bank, good governance culture means that:
i. Our staff adopt the Bank’s code of conduct, which provides guidelines on appropriate conduct and addresses issues of confidentiality, conflicts of interest, integrity in reporting, accountability and the fair treatment of all stakeholders;
ii. The Bank maintain a record of breaches of the code of conduct, have a mechanism to deal with such breaches and address such breaches in a manner that maintains the highest standards of integrity.
iii. The Bank have a signaling mechanism that sets out avenues for legitimate concerns to be objectively investigated and addressed in confidence and without fear of reprisal.
iv. The Bank policies clearly indicate to whom concerns can be escalated to; the avenue for reporting; and communicates the policy to relevant third parties to allow reporting if required.
2.4 The Bank, under the Constitution, is accountable to the people of Fiji. The RBF Act (1983) assigns responsibility to the Bank to carry out its statutory duties in an accountable manner.
2.5 The Bank continues to create awareness and engage with stakeholders regularly to ensure that information on our policy objectives and decisions are readily available and clearly communicated.
3.0 Corporate Governance Structure
Oversight of the RBF’s governance function is by the Board and the respective sub-Board and management committees. Executive Management of the Bank, Governor’s Office and Board and the Risk Management and Communications (RMC) Group as well as the External Audit contribute governance.
3.1 Role of the Board
The Board is responsible for the oversight of the entire governance process. The Board Audit & Risk Committee (BARC) and Board Governance Committee (BGC), both subcommittees of the Board, assists the Board to ensure a dedicated focus on governance of the Bank.
The Board Secretary is responsible for coordinating board functions, providing secretariat function in committees as necessary. The responsibilities of the Board and Board Secretary are covered within the Corporate Governance Charter.
3.2 Role of Executive Management
The Bank’s Executive Management (EM), consisting of the Governor, Deputy Governor and Group Chief Managers, have the overall executive responsibility for governance in the Bank and their respective Groups. EM is accountable to the Board for ensuring adequate governance structures, practices and processes.
The Policy Committees, which comprise of the Bank’s EM, assists the BARC and BGC with regard to its executive responsibility for governance in the Bank. Their role is to ensure that the Bank has in place an effective governance structure and that the responsibilities and accountabilities are identified, assessed and effectively managed in accordance with the Bank’s Corporate Governance Policy as well as the TOR for the respective committees.
Senior management may establish working groups in the Bank to develop strategies for the governance of Bank. The Committee retains oversight of these areas whilst the relevant Groups facilitate appropriate coordination and implementation across the Bank.
3.3 Role of the External/Internal Auditors
The BARC engages an external auditor to provide an independent opinion that the Bank’s financial reports are true, fair and are compliant with the applicable regulations, together with a management letter on the soundness of Bank. The external auditor is required to check and confirm the absence of fraudulent activities and check the processes used to monitor statutory, regulatory compliance and reporting of disclosures.
The BARC engages internal auditors to provide independent assurance on high risk areas. This function reports directly to the BARC and is outsourced.
3.4 Role of Risk Management and Staff
The Bank’s risk management framework is set to safeguard the security, continuity, compliance and integrity of its operations in support of strategies and corporate objectives. The accountabilities of management and staff in respect of the Bank’s risk management framework are set out in a range of policies, which are reviewed regularly and approved by the Risk and Business Continuity Management Committee.
The Risk Management and Communications Group is responsible for facilitating, coordinating and providing advice on the governance process and all staff are responsible for adhering to governance processes and procedures.
4.0 Corporate Governance Policy Environment
4.1 The Bank is committed to the principles of corporate governance in compliance with recommended best practices. The Bank’s corporate governance framework reflects international best practices and standards, and links to governance arrangements within existing policies that ensure effective governance practices.
4.2 There are 16 policies and guidelines that set, monitor and evaluate the appropriateness of governance. These vary from the Code of Conduct Policy that guides the setting of ethical standards and code of business conduct to the Anti-Corruption and Bribery Framework which covers the requirements identified under FICAC’s Prevention of Bribery Act 2007, and contains provisions for whistle blower protection and the need for the disclosure of conflicts of interest by staff. The conflict of interest provisions under the Corporate Governance Charter and the Conflict of Interest Policy are for the Board and staff.
4.3 Accountability and Transparency are key governance objectives, and financial reporting and disclosures are presented within the Bank’s Annual Report to demonstrate stewardship through the publication of Audited Financial Statements.
4.4 Risk Governance is critical to the effective functioning of the Bank. The management of key risks are set within the Risk Management Framework and the Board’s responsibility for risk management is identified under the Corporate Governance Charter. The Risk Management Framework has a list of policies to help guide the relevant risks including the AML/CFT Policy which is a requirement under the FTR Act.
4.5 The complaints management framework for the Bank and the financial sector has relevant mechanisms for managing complaints.
4.6 Operational excellence with focused, flexible and efficient business processes, innovation and continuous improvement driven by quality teams also contributes to the sustainability of bank operations and practices.
4.7 The Risk and Business Continuity Management Committee is charged with the duties of ensuring the Bank’s preparedness to ensure operations critical to the Bank will continue.
4.8 Effective internal and external communication is an essential part of the Governance function, both to ensure that our policy stance is understood by external parties and timely information and right culture is set within the Bank. The ability to engage and influence key stakeholders is vital to achieving success and plays an important role in governance.
Reserve Bank of Fiji