From Matangi Tonga Magazine Vol. 17, no. 2, August 2002.

The Tongan Budget for 2002-3, passed by the Legislative Assembly on June 27, is the biggest ever, with the total revenue to be collected by government amounting to $120.25 million. Government Expenditure during the same period is expected to amount to $122.72 million, leaving us with a deficit of $2.5 million.

The top three Ministries with the biggest votes are the Ministry of Education with an allocation of $16.57 million, or 13.5 per cent of the budget; followed by the Ministry of Works with $13.71 million, or 11.2 per cent; and the Ministry of Health with $11.13 million, or 9.1 per cent. The increase in the vote of the Ministry of Works from $4.60 million in the last financial year to $13.71 million in this year is due to the rebuilding of Vava‘u after Cyclone Waka.

After government ministries received their votes for the new financial year, the Tonga Legislative Assembly decided to lead the way in Program Budgeting by allocating $270,470 from its $2.07 million vote and putting it aside as a Parliamentary Reserves.

The Tongan Government’s income in the form of Revenue and Grants goes up by $13.9 million, from $89.9 million in the last financial year to $103.8 million this year.

Expenditure and Net Lending also went up by $21.1 million, from $91.4 million last year to $112.5 million this year. However, it should be noted that this increase in expenditure may not have as big an impact on the economy as might be expected, taking into account that the Tongan Pa‘anga has dropped in value against the currencies of its trading partners.

During  the 12 months between July 2001 and July 2002 the pa‘anga dropped by 16 per cent against the New Zealand dollar, with New Zealand being our biggest trading partner.

The budget deficit of $2.5 million, is offset by a loan of $10.8 million from the World Bank for the restructuring of hurricane damage in Vava‘u and the Niuas.

Of the Government’s current revenue, 75.5 per cent comes from taxation. Over half of the taxation revenues (52.5 per cent) will come from Customs Duties and the Port and Services Tax, while 10.1 per cent comes from domestic taxes on goods and services, and 12.5 per cent comes from income taxes. The remaining 24.5 per cent of all revenue comes from non-tax income, such as administrative fees and charges, and entrepreneurial and Property Income.

Public Debt

The total government public debt at the end of the 2001-2 financial year was $164.1 million, External Debt amounted to $130.4 million and domestic debt amounted to $33.7 million. It is also estimated that $33.5 million of government public debt has been onward-lent to government-owned enterprises and statutory boards.

Out of the $130.4 million external debt, $122.7 million is government debt and $7.7 million is debt of public corporations guaranteed by government. Out of the $33.7 million domestic debt, $24.7 million is government debt and $9.0 million is debt of public corporations guaranteed by government.