Bank moves to slow spending [1]
Saturday, September 26, 1998 - 11:00. Updated on Sunday, December 6, 2015 - 16:17.
From Matangi Tonga Magazine, Vol. 13, no. 3, October 1998.
Tonga’s National Reserve Bank wants Tongans to cut down on overseas spending to slow the decline of the foreign reserves, and on September 14 announced new measures to restrain bank lending.
It raised the minimum lending rate for banks from 7 per cent to 9 per cent.
The Reserve Bank also raised the required reserves ratio from 10 per cent to 12 per cent. This is the proportion of deposit liabilities which the banks must maintain with the Reserve Bank.
“The measures are intended to slow the decline of the foreign reserves,” said ‘Ofa Ketu‘u, senior officer. “The foreign reserves are now just below 2.5 months of import cover, and below the bank’s minimum target of 3 months cover.” She said the Bank considered it was equally important to revitalise the export sector and it was preparing a package of measures for government to consider.