As Tonga's economy grapple with intensified global risks, the National Reserve Bank of Tonga (NRBT) has introduced a new monetary policy to help keep the economy stable.
Presenting its new Monetary Policy Statement (MPS) today in Nuku'alofa, NRBT Chief Manager of Economics, Ms. Mefilina Tohi said "this will afford the NRBT to be in a stronger position to assist the economy, should the downside risk materialise."
Ms. Tohi noted that Tonga’s economic growth is still lower compared to the regional and global growth.
She identified global risks such as uncertainties in international trade policy, geopolitical tensions, and weakening global growth.
There is also an anticipated new 1% US tax on remittances from 1 January 2026, creating additional downside risks.
“The global economic growth is weakening with elevated uncertainties on global trade developments, taxes on foreign exchange, and geopolitical tensions, which could potentially affect our domestic growth and inflation.”
NRBT Governor, Tatafu Moeaki said today that the NRBT is promoting price stability, which includes both internal and external stability.
Therefore, over the next six months, from September to February of next year, the NRBT will be implementing its new policy measures:
- Implement an Interest rate corridor by adopting a conventional mid-rate corridor framework with regular policy rate announcement to guide market rates.
- Issue NRBT notes to absorb excess liquidity, build infrastructure for interest rate channel.
- Maintaining the Statutory Reserve Deposit (SRD) at 15%.
- Review the Exchange Rate Policy Framework to ensure external stability.
- Enhance communication framework for greater transparency, and effective market signalling.
- Strengthen coordination and policy alignment between Monetary and Fiscal policies.
- Advance initiatives under National Financial Inclusion Strategy.
