From the House by Pesi Fonua

There were loud exchanges in the House this morning, 20 June, in the debate over Tonga’s 2023-2024 Annual Budget.

When the Minister of Finance Hon. Tiofilusi Tiueti announced his $784.2 million Budget, on 14 June, he told the House there is a deficit of over $27 million. The budget includes the government’s significantly increased foreign loan repayments.

The House has spent all of this morning correcting the Budget, which was passed on to the House’s Standing Committee on Finance, chaired by 'Aisake Eke yesterday. The amendment was completed late yesterday evening.

After the amendment was tabled into the House this morning, the Prime Minister and his government argued about the breakdown of the figures. They agreed that the total figure of $784m was correct but argued over the allocations for Ministries. They have gone for lunch but had not sorted out that problem.

Economic recovery

Last week, the figures announced were the recurrent budget, for the running of government, amounting to $419.5 million or 53.5 per cent of the total. The balance of $364.7 million (46.5 percent) is for development expenses funded by donor partners.

Of the total budget, 65.8 percent or $515.8 million is the appropriated cash, while 34.2 percent or $268.4 million is donor in-kind.

The budget focuses on economic recovery, greater resilience and sustainability, and is the second budget of the current government, since the last election, 

The theme for the 2023/24 Budget is: “Partnership for greater resilience and sustainability to restore inclusive growth.”

However, Hon. Tiofilusi Tiueti pointed out that after comparing the revenue collection and government expenditure for 2023-24, “there is a budget deficit of $27.2 million.”

The biggest allocation in the Budget Estimates 2023-2024 is for the Ministry of Infrastructure and the Ministry of Finance and National Planning (18%), followed by the Ministry of Education and Training with 17%.  The Ministry of Health and MEIDECC have 9%.

Hon. Tiueti said that the Ministry of Finance’s vote, included a government’s loan repayment totalling $67.1 million for 2024, an increase of $23.5 million from 43.6 million in the current financial year. Much of this is for the loan repayment to China for the reconstruction of Nuku‘alofa.

See also:

October 22, 2018: Tonga starts repaying $10.8m a year to China for reconstruction [2] The Tonga Government will start paying $TOP10.8 million a year during the next ten years, (principal only) of its  $TOP119m loan from the Exim Bank of China. … known as “Export Credit”...the loan, approved by the Tongan Parliament on 2 July 2007 was for the reconstruction of the Nuku’alofa CBD after it was ravaged during riots on 16 November 2006. A total of ten projects were funded with the loan and a ceremony was held on 14 August 2012 to mark the completion of the reconstruction projects. Tonga later concluded an agreement with the Exim Bank to defer its payment of the principal amount of the loan for five years, although it would start paying the loan interest.

February 17, 2021:   Tonga-China loan repayment deferred to 2021-22 [3]