Tonga depends of foreign aids and remittances [1]
Sunday, December 19, 2010 - 23:06. Updated on Monday, September 9, 2013 - 18:40.
Editor,
ONE of the fundamental challenges that the new Government will face is inheriting an extremely depressed economy that depends on foreign aids and remittances. Tonga is not alone in this problem, most economies around the world are facing major problems like us, except for those Chinese and people from down under, that would be Australia by the way - those two guys seem to be doing fine. Oh wait, that's because they were smart enough not to get greedy with the all American Wall Street selling of those Derivatives that came crashing, it nearly crippled the all mighty U.S. economy and has put some other economies in near bankrupt (just ask the Greeks they know first hand). I think it did crippled the U.S. economy because Washington is still handing out billions in bail out money. We need a good PM to get a few millions of that money for us, sorry I am being sarcastic . . . ha! ha!
Okay, let's be more serious and focus on solving our economic problem. So, why is the economy going to be a major problem for the new Government? Because Tonga depends on foreign aids and remittances. Some people may say, what's new? Isn't this already a problem for the Government now? How have they been able to manage? Well, I'll let you in on a little secret, Feleti Sevele, was actually a pretty good statesman, he was very good at getting foreign aid. He had his faults, but he was very good at smooth talking the Kiwis to help us out and he was very good at foreign policies to play the heavy weights on each other, but not very good at negotiating terms. I figure he was strong armed by the Chinese on their loan terms, we should have stood our grounds for better terms, but the damage is done already. Now we can't afford to have any one of those businesses that borrowed from the Chinese money default on their loan, I figure the Chinese did not budge on land rights, just look at their terms on material and labor, they got their ways with us, why did we agree to let them bring their own labor? and import their own material? Why didn't be negotiate for the funds to disburse thru our banking systems is beyond me. Just ask ANZ Bank, I am sure they were not happy. I am sorry Mr. Sevele, but we could have done better on those terms. I think the new Government will need to call on you a few times, so don't go anywhere. Overall, Mr. Sevele was a very good statesman and foreign policies. By they way, he had someone in his staff name Rob, I heard he's pretty good at talking to the Kiwis.
Anyways, let's deal with the real problems. The new Prime Minister will have to make some very hard decisions. The first one is steep cut backs on government expenditures. This has to be done. Some people may say What? What you mean cut back on Government spending? Every other Government around the world is giving away money, why can't we do the same thing? Well because they have autonomous monetary policies, that's just a fancy way of saying they can print their own money. We don't have that luxury. We can try, but our hands will be slapped really hard (mostly by the Kiwis) and the effect of a policy of this kind would be deflation of our currency and huge inflation, that's basically a long economic explanation for price of bread going up quickly, by the way, it means cost of everything else going up. Think about it this way, I think you can get a loaf of bread for $1.40 now? How would you like to pay $3 for the same loaf of bread in a couple of months? Not a good idea to pursue expansionary monetary policies.
So, we have to cut back on government expenditure. Which one to cut back? Well, the first one is labor cost, and the Royal budget will need to cut back.
Both the Civil Servants and the Royal sides will want things that the new government will have to tell them No there is no budget for it; hard decisions will need to be made and explained to the people in a way they will say okay, we are okay with that.
But seriously, Tongans are funny sometimes, they would be okay with their own brother or father to ngaahi kovi'i them, but they will absolutely annihilate you if you are not family.
Regards,
Thomas M (Soni) Uata
thomasuata [at] gmail [dot] com ( thomasuata [at] gmail [dot] com)