Tongans warned of looming fiscal crisis [1]
Monday, April 23, 2007 - 19:32. Updated on Monday, July 20, 2015 - 16:09.
Warning that Tonga faces a potential fiscal crisis, Finance Minister, Hon Siosiua T. 'Utoikamanu, today advised government ministers to trim back their departmental budgets, with cuts that could amount to $22 million for the new financial year.
The minister said that his ministry had received around $165 million in budgetary requests from Government departments against a revenue projection of $143 million for the next financial year starting on July 1.
"The problem with a budget deficit is that it can bring about other harmful effects such as a major deterioration in the strength of the Pa'anga, capital outflows, rising inflation and negative economic growth," he said in a statement.
"In short, we are facing a potential fiscal crisis after 16/11 and all Government agencies must take heed of this. I have instructed Treasury to take a focused approach when considering the budget proposals of all departments. I intend to do everything possible to avoid a fiscal crisis by making appropriate adjustments to proposed Government expenditure.
"This is not an ideal situation because reducing Government expenditure often hurts the poor," he said.
The Minister said he would be asking the Government to make some difficult choices as well as considering all options to avoid having a long-term deterioration in Tonga's fiscal position.