By Katalina Siasau
The Tongan government has proposed a national budget estimate of $929.5 million paʻanga for 2026/27, with a projected $38.1 million deficit, presented to Parliament yesterday, 18 May 2026, by Prime Minister Lord Fakafanua.
Presenting the first budget of his new government in his role as Acting Minister for Finance, Lord Fakafanua said the government is projected to generate $891.4 million in national revenue, a decrease from $950.2 million in 2025/26.
He said the gap between projected revenue and government expenditure has resulted in a budget deficit of $38.1 million.
He noted the deficit is primarily driven by financing key government initiatives, including electricity subsidies, a cost-of-living adjustment (COLA) for civil servants, and support for the government-owned airline, Lulutai Airlines.
He said $18 million paʻanga has been allocated to subsidise electricity costs for all households, $1 million for emergency energy crises, $5 million to support a 3% COLA for civil servants in response to rising living costs linked to the energy crisis, $3.2 million for Lulutai Airlines, $3.7 million for local ferries, and $900,000 for a one-off $100 top-up payment to elderly and disability welfare beneficiaries.
Meanwhile, the PM said the $38.1 million deficit will be financed through $35 million in government domestic bonds and $3.1 million from cash reserves.
Addressing the House further, Lord Fakafanua outlined the budget theme, “Accelerate delivery of vital Government initiatives to generate sustainable, inclusive growth.”
He said the theme responds to challenges facing the country, the high fuel prices caused by conflicts in the Middle East, the ongoing dengue fever outbreak, and the impacts of natural disasters and climate change.
“Tonga still faces many restrictions to its economy and development, including an unfavourable decision-making system, incomplete legislations, high government salary expenditures, increasing operational costs, a small private sector, inflation, reliance on imported goods, high fuel prices, infrastructure challenges, skills shortages, youth unemployment, and the migration of skilled workers,” he said.
The PM raised concerns over the number of uneducated males in Tonga and insufficient support for TVET education.
On health, he said Tonga continues to lose staff, doctors, and nurses seeking opportunities overseas.
He also stressed the importance of protecting the marine environment, noting a decline in whale watching numbers in Tonga in 2025, and said there is a need for increased funding for the tourism sector.
He framed his budget as a "sustainable and inclusive" solution for these issues.
Tonga’s economic growth is projected to decline from 2.7% in 2025 to 2.3% in 2026, and further to 1.9% in 2027.
PM Lord Fakafanua said the decline is driven largely by conflicts in the Middle East resulting in energy-related challenges and associated economic pressures.
Following the initial budget presentation, Parliament unanimously passed the first reading of the 2026/27 Budget Estimate.
The budget estimate was then referred to the Finance & Public accounts Committee, who will further scrutinise and review it before reporting back to Parliament next week.
Chairman of the committee, People's Representative of Tongatapu 5 Hon. Dr 'Aisake Eke told the House that his committee will conduct individual assessments of the budget from 19-21 May, before holding a formal meeting on Friday, 22 May.
The committee’s report is expected to be completed early next week and presented to Parliament on 27 May.
The Speaker adjourned the House until further notice.
