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Half-caste balanced budget, “just a dream”, says Finance Minister

Nuku'alofa, Tonga

From the House by Pesi Fonua

Yesterday in Parliament the Minister of Finance, Hon. Dr Pohiva Tu‘i‘onetoa, to the surprise of the House, called his 2019-20  balanced budget “just a dream”, during the budget debate on 18 June 2019.

The previous day he had called his budget a “half-caste balanced budget” because of significant budget support from foreign donors.

On Tuesday Lord Nuku queried if the financing of the 2019-20 National Budget would follow a similar path as the 2018-2019 National Budget, when a $35 million Budget Support fund would not be released until the Foreign Investment Act 2018 was amended.

Hon. Dr Pohiva Tu'i'onetoa responded that his National Budget was just “a dream”. He explained that after the Budget was passed by the House, then revenue would start to come in. "Budget is a dream - to become true, we hope."

Siaosi Sovaleni, disagreed, and said  "the National Budget is not a dream."

The issue was raised because Hon. Tu'i'onetoa stressed that the dissolution of parliament by the King in 2017 had caused the delay for the House to pass the Foreign Investment Bill 2018 and for His Majesty in Privy Council to give his consent.

Hence, the $35 million Budget Support Fund was not released. As a result, according to the Minister of Finance, the government faced financial constraints. But, he said, it was fortunate for Cyclone Gita that financial assistance was given to rebuild after the destruction, and it helped to address the financial needs of government.

But how government had accessed the fund for recovery from Gita to address its own financial needs, was not spelled out.

The amendment to the Foreign Investment Act was enacted on 28 February 2019.

There was no mention of any Bills to be passed before the Budget Support for this year’s budget would be released.

Not dream money

People's Representative, Tevita Lavemaau, the former Minister for Finance, before he was removed from Cabinet and was replaced by Hon. Dr Pohiva Tu‘i‘onetoa, reminded the House that the Budget Support coming from the World Bank and other donors was not “dream money”.

Lord Nuku queried why government had guaranteed a $7 million loan by an individual from the Tonga Development Bank.

There was no clear answer from the Minister of Finance, but Tevita Lavemaau pointed out that government’s recent selling of its shares in the Tonga Development Bank was to meet a demand by the National Reserve Bank.

Government, the former sole shareholder of the Tonga Development Bank, had recently sold 30% of its shares, with 15% each to the National Retirement Fund and the Public Service Retirement Fund.

When the House got into the loans issue, the Prime Minister Hon. ‘Akilisi Pohiva told the House that the government's securing of other loans [in the past] and taken by five businesses to rebuild their buildings that were damaged during the riots in 2006, would never be repaid by those businesses.

Tevita Lavemaau asked the Prime Minister how he planned to repay the Chinese loans.

There was no clear answer from the Prime Minister.

Then the Prime Minister said that the government could not repay the loan.

Tevita Lavemaau, insisted, “Why was the loan?”

Lord Nuku asked, “Who burned the town?”

The Prime Minister replied, “because of the riot.” He elaborated and claimed that “God destroyed the CBD” because of  wrong doing. “It was a natural event. We are having problems because of decisions by the former government.”

The loan from China to reconstruct the Nuku’alofa Central Business District after the riots of 2006 was about USD$119 million.

The Minister of Police, Hon. Mateni Tapueluelu pointed that under the 2019-20 budget there was a $1 million for the establishment of a Commission to investigate the riots. “We will will get those who burned Nuku’alofa,” he said.

The Prime Minister repeated the question, “who burned Nuku’alofa?”

Then he went on to justify his comment that God destroyed the CBD. He said he had been in Parliament for 32 years. He said that it was a sin, that in those days when parliament opened, all members received their whole salaries. He said that one of the members then went and lived the USA for a very long time.

Pacfic Games

The other issue that was raised by People's Representative Siaosi Sovaleni, was that government had collected over $10 million in levies because Tonga was going to host the 2019 South Pacific Games. It was cancelled and Samoa is hosting the Games. He queried why only $2 million had been given to the Tongan team to the South Pacific Games.

The Minister of Health, Hon. Saia Piukala, reminded the House that government had given $3 million to support the 43 Tongan athletes who will represent Tonga at the 2019 South Pacific Games.

Other urgent projects that government has allocated funds for in the new National Budget are $1.1 million for the recruiting of 100 new police officers and $1.5 million for the Customs Department to step up their fight against the use of illegal drugs.

The House closed for the day, amid uncertainties over how the national budget will contribute to the Tongan economy during the coming financial year 2019-20.