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Tonga economy and loans



The monthly review of the Tonga Economy released on 25/07/2007 says that the economy is slowly on the mend, but a quick look at the figures tells a different story. Taken from the latest economic indicator - Inflation is running at 5.7%, economic growth for the year is forecast at .6%; trade figures last year: imports cost $236 million but exports only raised $19 million. Unemployment is going up by as much as 20% and the National debt to date is $192 million plus $25 million in ADB Loans that Government has just approved and on top of that another $118 million loan from China. By the end of this financial year, the National debt will be $335 million.

Previous press releases from the Finance Minister have told us that China will charge Tonga 2% but then the Government will lend out this fund to private businesses and will charge 5% interest. The interest on the loan from the ADB is charged 1.5%. When all these loans are finalised, a rough estimate of the National debt including the interest will be over $350 million.

I suspect that the Finance Minister and the Government are taking a huge gamble here. They are hoping that this loan from China will boost the economy and bring more investments to Tonga. My heart is desperately hoping that this move will work for Tonga but my head is telling me that it will cost Tonga dearly. Future generations will be suffocated by these debts. It reminds me of the famous saying in the Bible "sons will inherit the sins of their fathers".

This Government takes out loans on top of the previous Government's loans. The payments terms will no doubt be set to run between 20 to 40 years or so. If if you are in you 50s and 60s now, you will be long gone from Government between 2027 and 2047 so our children will have to pay for the loans.

Working together

In 1948, the State of Israel was created and history tells us that there were massive activities and movements among the Jewish people in their effort to build their newly created Nation. One of the activities they did was fund raising in America, UK, Europe and other parts of the World and the funds went directly to their Government aiding the re-construction of Israel and re-settlement of her people.

The moral of the story is this - by working together, we as people can re-build Tonga without taking out loans. If the Jewish people can do it, why can't we? Look at the remittances Tongans from abroad send home each year. Last year, it was almost $200 million pa'anga, far more than the amount borrowed from China. There are better ways to raise funds to re-build Tonga without putting the noose around the necks of future generations. Yes, we can achieve this by working together. Let us all put aside our differences and work together.

It would be wonderful to see the King and the Royal Family taking the lead, the Government and the PRs, Parliament and the Church leaders and Nobles. Why not send out 'Akilisi Pohiva, Clive Edwards and 'Uliti Uata to fund raise abroad. Instead of putting them through a long costly trial, perhaps it is better to make use of their talents in a positive way, which will help re-build Tonga.

I don't believe that now is the right time for political changes in Tonga. Political power change in any country around the world can only function successfully if the economic environment is healthy. In Tonga right now, the economy is barely breathing. If we go along with the idea of removing the Monarchy and turning Tonga in to a Republican country like USA, would it make the economic situation better? I doubt it very much. Tongan politicians haven't got any mandate or policies to form a Republican Government let alone running one. What about turning it into a Constitutional Monarchy like the UK - would everything be alright then? Maybe we should review this idea in the next few years but right now, we should concentrate on helping the present Government re-build the economy. We need to re-build Nuku'alofa and make it a place fit for purpose.

Tripartite fundraising

So instead of having the Tripartite Committee looking at changing the Constitution, why not task them with organising fund raising instead. Another group should be set up to look at how Tonga could reduce the amount spend on imported goods by half during this financial year. Transport is a good commodity to start with - limit the import of private vehicles to the island. Encourage walking and public transport instead. Limit the import of unhealthy food stuffs such as sipi and tinned corned beef etc. Encourage everyone to grow their own vegetables etc - much healthier and costing nothing.

Information Minister

Last week the Government appointed Hon Afualo Matoto as the Minister of Information. Is it necessary to have a Minister of Information in Tonga? Does it take a whole Department to spin out information for this Government?

What about giving the Minister of Information the job of reviewing our Tongan customs particularly some of the costly ones such as funerals and gift giving, fakapale and Tongan feasts. We are now living in an age where everything costs money yet still we expect to carry out customs according to how those in ancient times performed them. There is an urgent need to review how we as people perform these tasks in dignified manner but without the cost and burden associated with them. There should be a national debate on these issues so that people can put forward ideas on how to scale down unnecessary financial burdens put on individuals, families and local communities.

I live and breathe by the Motto of my school - "Ko Tonga Mo'unga ki he Loto". I do believe passionately that if our King, the Government, Church leaders and PRs work together and mobilise fund raising to rebuild Tonga, we will raise the funds needed in no time. Loans are not the answer to everything. Reminds me of a conversation I had with a Tongan official regarding the loan from China and he said that 'China will only be charging 1%' but as it turned out, China is charging 2%. I repeated this story to a friend who happens to be a Banker in London and he almost fell off his chair laughing. Then he said, 'tell the people in Tonga that a seniti in your pocket is worth more than $2.36 million of loan payments to China'. He completely fell off his chair when I said that actually, the Tongan Government has already allocated $18 million for loan repayments alone. "And how much does Tonga make from exports?" he asked, "a million more then the loan payment allocation" I replied.

Can Tonga afford the loan from China?

'Ofa atu

Senolita Swan

senolita_swan_3 [at] msn [dot] com