A proposed grant of TOP$4 million from NZAID and AusAID for the establishment of a Business Recovery Facility for Nuku'alofa CBD businesses that were affected by the 16/11 riot, is so far the only promise of definite capital input toward the rebuilding of Nuku'alofa's private businesses.

There has been talk of a Soft Loan facility to be initiated by government, and of course, the payouts by insurance companies on massive claims, but so far they have come to nothing more than wishful thinking.

The TOP$4 million grant from NZAID and AusAID, however, appears to be more real as the initiative has been set in motion and only a few decisions are left to be finalised.

According to the New Zealand High Commission in Nuku'alofa, NZAID and AusAID representatives are expected back in Tonga at the end of the month and the Business Recovery Facility for Nuku'alofa businesses should be implemented during March.

When the Representatives of the two aid donor agencies, AusAID and NZAID were in Tonga at the end of January they met representatives of the Nuku'alofa Business community to get feedback on their proposal. They have three distinct products on offer:

1. Interest rate subsidy. They offer to subsidise interest rates on loans, based on existing commercial rates. The rate to be reduced by 8% in the first 12 months, then 4% in the following 12 months, provided that the subsidised net interest rate (interest rate minus the subsidy) does not fall below the rate of inflation at drawdown.

2. Credit guarantee scheme. To apply to loans up to and including TOP$20,000. Under this scheme an amount will be deposited with the National Reserve Bank of Tonga on trust which can be used to make a 50% contribution to any losses that may be incurred on the loan.

3. Business advisory. An amount of up to $500 is to be offered in business advisory services to affected businesses. Businesses will be able to choose their preferred provider from a list of approved advisors. First preference is to use Tongan based advisors (including existing services provided by local banks) but if necessary additional overseas expertise could be added to the approved list. Approved advisors will seek reimbursement of up to $500 for business advisory services provided to affected businesses.

During the meeting there were lively discussions on the three products on offer, and generally the business community wanted to go ahead with the program. Since that meeting, Edward Ablett-Hampson from the New Zealand High Commission said that the three products were acceptable to all, and a Banking Consultant Committee was supposed to be in place before the end of the month, "and the Reserve Bank Trust Fund should also be in place by March."

Edward also pointed out a few issues that had not been finalised, such as the businesses who will be eligible for the products, whether they should stick with the 136 businesses that had been identified by government to have been affected or whether to include all other businesses who had been affected one way or the other by the riots. The other issue was how much the Tongan government would like to contribute to the facility.