By Pesi Fonua

Tonga’s $15.2 million pa'anga loan repayment due to the EXIM Bank of China, during the 2020-21 financial year, has been deferred to 2021-22, the Minister of Finance, Hon. Tevita Lavemaau, confirmed yesterday 16 February.

He said the deferment until next year would help to free-up budgetary funds for fighting the threat of CoViD-19.

Hon. Lavemaau said that the loan repayment to the EXIM Bank was already allocated in the Government’s 2020-21 Annual Budget, but because China offered to defer the loan repayment, $7.2 million had been reallocated in the Tonga budget to contribute to the government program to counter COVID-19.

The remaining $8 million in the budget for the loan repayment will become part of a reserve fund for the repayment of government’s loan from the EXIM Bank of China.

Export credit

The Tongan Parliament on 2 July 2007 approved a government loan from the EXIM Bank of $TOP119 million for the reconstruction of the Nuku’alofa Central Business District following riots on 16 November 2006.

The loan was described by the then Minister of Finance, Hon. Siosia ‘Utoikamanu, as an “Export Credit”, meaning that the Exim Bank paid a contractor to come and construct the buildings, “None of the money is given to the government. The government picks the work that needs to be done and then informs them.”

The Tongan government during the past few years has also borrowed 291 million Yuan, the equivalent of $TOP103.48 million from the EXIM Bank for a public road project.

According to a spokesperson from the Chinese Embassy, Nuku’alofa, Tonga’s total unpaid loan from the EXIM Bank of China is 731 million Yuan or $TOP259.95 million. This includes 440 million Yuan for the reconstruction of the Nuku’alofa Central Business District, and 291 million Yuan for a government road project.