Tonga’s National Reserve Bank on July 1 2020 declared that Tonga’s economy would remain contracted during the current Fiscal Year due to the negative impacts of Cyclone Harold and the continuing COVID-19 restriction.

However, the Foreign Reserve is still expected to remain at sufficient levels above the three months minimum threshold of import coverage.

Inflation is also expected to gradually increase but will remain below 5%.

The banking system, however, continued to remain sound supported by strong capital and adequate profits.

The Reserve Bank reported that “liquidity in the banking system remains relatively high, indicating that existing capacity is still available for further lending.”

The official foreign reserves increased over the month and year to April 2020 by $17.7 million and by $10.9 million respectively.

The rises were mainly driven by the inflow of budget support, grants, and additional funds from donor partners to assist with Tonga’s preparations for COVID-19.