Many of Tonga's businesses are already facing a cash crunch and looking to scale back their operations, as the impact of the CoViD-19 pandemic bites, the Tonga Chamber of Commerce and Industries (TCCI) stated today.



“The Tourism Industry - accommodation, hospitality, restaurants, travel and tour services, international and local airlines [are] not the only ones seeing a sudden drop in business, most businesses are already facing a cash crunch, and starting to look at letting go of employees and scaling back their operations.”



The statement by the TCCI today follows last Friday's Declaration of a State of Emergency for Tonga. “We are working to identify ways to support local businesses to get through this rough patch. We talked to the Government last week on ways to mitigate the impact of COVID-19 on businesses.”



The TCCI has asked for some flexibility from banks and financial institutions with businesses and employees affected by this pandemic, some relief around tax and duty obligations for businesses impacted by CoViD-19. “and to ensure that basic utilities, services, and infrastructure continue to operate.”

TCCI offered advice for approach to this pandemic:


• Suspend Capital expenditure.
• Develop a culture of financial discipline.
• Cut wants, spend only on needs required for viable sustainability
• Put staff on reduced work days. Don't sack.
• Roster so all work, but fewer hours.
• Talk to banks about a moratorium on monthly finance charges. Let banks reset/reschedule loan arrangements.

Immediate needs before wants. Defer everything else.

National Reserve Bank of Tonga

Meanwhile, the National Reserve Bank of Tonga has reassured Tongans that our banking system is strong and well capitalised with sufficient liquidity to withstand the impact of the coronavirus (COVID-19) but expected economic growth to be revised lower for the year.

While the NRBT Governor Dr Ngongo Kioa reported that  “Tonga’s economic fundamentals are strong,” he also warned that “CoViD-19 is expected to adversely impact the external account balances, the foreign reserves, the fiscal account and consequently economic growth. Specific sectors in the trade, travel and tourism sectors will also be affected.”

“Eventually, supply shortages, delays in projects and major events and reduced business hours, will flow through to weaker demand and a slowdown in economic activity. As such, the Reserve Bank projects economic growth for 2019/20 to fall below 3% and may be revised lower,” he said.

Due to the negative impact of COVID-19 on the economy, NRBT Board of Directors met to consider monetary policy measures to support economic growth while preserving financial stability.

The Directors  approved NRBT monetary policy measures to support the banks in mitigating the negative impact of the coronavirus on the economy and provide essential financial services to households and businesses.

• Provide liquidity support to the banking system if needed.
• The banks are well capitalised to absorb risk and there is no adjustment required at this tim.e 

• Ease the exchange control requirements if needed .
• Continue with current practice on issuing Government Bonds if required. 

• Weekly meetings with the banks to ensure clear communication to enhance preparedness and best practices.

NRBT also met with the commercial banks that are ready to assist their customers affected by the coronavirus on a case-by-case basis, and depending on individual customers’ circumstances.

It stated, commercial banks confirmed the following measures:

• Reduce or suspend the principal loan repayments to interest only loan repayments .
• Restructure loans to businesses that have reduced business hours in affected sectors such as tourism and 
related industries like transportation. 

• Restructure loans to individuals who have been laid off and extend the term of the loans to reduce repayments .
• Reduce loan interest rates on a case-by-case basis 
and provide access to short-term funding, if required .

Commercial banks

The ANZ-Tonga in Nuku'alofa stated Friday that it's support measures include:

• Reduction of 0.50% per annum on all local currency overdrafts for commercial customers (effective 6 April).
• Reduction of 0.50% per annum on all local currency variable term loans for commercial customers (effective 1 May).
• Reduction of 0.50% per annum on all local currency variable home loans and personal loans (effective 1 May).
• Removal of monthly loan administration charges for term loans for both retail and commercial customers (effective 1 May).
• A waiver on loan restructuring fees for commercial customers on a case-by-case basis.
• Reduction in repayment amounts for commercial customers in line with the reduced interest rates.