Tonga to repay Chinese loan, no deference

It is important at these times that there is that independence between the Reserve bank and Government. Economic crisis is bound to happen when Government's turn to their Reserve Bank to print money to pay back their debts. These annual payments will have to paid from Government's coffers, they'll probably look at raising taxes somewhere, and/or cutting costs to make some savings to cover the annual payments. Its made bit more difficult that part of the Chinese loan went to some projects that were not related to rebuilding of the CBD, and some had negative CBAs where their costs outweighed their economic benefits to the economy. Those that went to private businesses, hopefully that portion would be covered by them. The Goverment will have to come up with the rest.

Maybe this can be seen as a bit of a wake up call to us, a blessing in disguise perhaps. That the ways of using Government debt and foreign aid to secure votes is not leading us down the right path. Increases in spending and the hiring of more public workers over the years does not really make sense if Tonga is relying more and more on foreign aid for budgetary support. It does seem parliament perhaps are not voting for a more austere budget because of fear of voter backlash, and it doesn't need to be that way. I'm sure voters would support a representative who has a more long term plan that would see Tonga's economy growing more. And with a stronger economy Government would have enough money to pay back whatever debts it owes. So this could be a blessing if we use this dire situation to go back to the fundamentals and focus on drivers of economic growth.