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Government wants Reserve Bank to 'run a tight ship'

Nuku'alofa, Tonga

Tongan Pa'anga

The reasoning behind the Tongan Parliament's urgent push to work seven hours overtime on the 8th and 12th March in order to pass five bills that don’t address Tonga’s immediate Cyclone Recovery needs, remains a mystery to the public and some Members of Parliament. Three of the five bills grant the Reserve Bank more control over moneylenders while the two other bills regard foreign exchange levies and Pacific Games taxation incentives.

A baffled MP Tevita Lavemaau told Matangi Tonga that he could not find a good reason as to why Members of Parliament were forced to work two nights overtime to pass Bills that he believed were non-urgent. Lavemaau stressed that the most urgent priorities were to rebuild homes and schools damaged by Cyclone Gita.

“I think this Government doesn't know what to do,” said Lavemaau.

According to the Governor of the National Reserve Bank of Tonga, Ngongo Kioa, the urgency for Parliament to pass the bills was entirely a Government initiative.

Ngongo stated “To say that they were urgent (the bills), it has nothing to do with the Reserve is entirely a view of the Cabinet"

The titles of the five bills that were passed were: the Microfinance Institutions Bill 2018, Moneylenders Bill 2018, Foreign Exchange Control Bill 2018, Foreign Exchange Levy (amendment) Bill 2018, and the Pacific Games 2019 Taxation Incentives (repeal) Bill 2018. The Microfinance Institutions Bill and the Moneylenders Bill were passed by parliament after working four and half hours overtime on the evening of 8 March. The remaining three bills were all passed after the House worked two and a half hours overtime on 12 March.

Lavemaau stated that the government needed to help rebuild schools “for kids to get out of these tents, which are too hot inside and uncomfortable, and get back to school, into their class rooms."

“The other area that government should be active on, right now, is agriculture. There is plenty of root crops and food now, but we should be actively replanting to replenish our food supply for the coming months”.

“There is money there now, New Zealand, Australia and other donors have committed millions.”

Lavemaau pointed out that one of the bills that were passed, the Foreign Exchange Levy Bill 2018, permits Government to collect $6.6 million from the Foreign Exchange Levy Act.

Three of the five bills that strengthen the Reserve Bank's control over moneylenders and foreign exchange dealers are the Microfinance Institutions Bill 2018, the Moneylenders Bill 2018 and the Foreign Exchange Control Bill 2018.

These bills according to Ngongo Kioa were drafted by the Reserve Bank with assistance from the International Monetary Fund and had been awaiting a Parliament decision since 2016.

Ngongo stressed that the role of the Reserve Bank was "to make sure that money lenders don’t abuse their customers" and "to protect the interests of the people.”

Ngongo also reassured that the new powers would not infringe on anyone's right to choose who they borrow from.

“Yes, if they (borrowers) are given the correct information (by the moneylender). If the owner explains to the people the interest rate, I think the borrowers will think again."

“So the move is to enable us to keep tab of the money supply that we can’t record. Secondly, their interest rate.” He also pointed out that 85% of the foreign remittances that come into the country come through Foreign Exchange Dealers, "not the Banks."

Ngongo said that the Acts are now with the King, and once HM gives his consent to the Acts they will proceed with the next step to provide guidelines to money lenders and foreign exchange dealers.