From the House, by Pesi Fonua

The dire state of the Tongan economy was presented to the House at its first meeting on Friday January 14, when the new Minister of Finance Hon. Sunia Fili told the House that during the past six months government had collected only 46% of the revenue it expected.

There was a major concern over the very low returns from government enterprises and also a need to reduce spending on civil service salaries.

After the members of Tonga's new parliament took their vows they were told by the Prime Minister Lord Tu'ivakano of the dire state of the Tongan economy and the need for them to work together and to be productive.

Both the Prime Minister and the Minister of Finance assured members that government still had enough money in its coffers to see the government through their "honeymoon" until the end of the current financial year on June 30.

Hon. Sunia Fili presented a brief summary of the state of the economy with figures from an unaudited report.

He told the House that during the past six months government had collected $78.5 million or only 46% of the revenue it was supposed to be collecting. But government was still able to meet its financial obligations with financial assistance of $9.4 million from the World Bank, which arrived in December, another $9.4 million from the Asian Development Bank and 5.5 million Euros from the European Union expected in March or April.

He said that by January 10, this year, government had a surplus of $8.8m. It also had $38m in banks, in addition to $6.9m of general revenue that was deposited in banks for the daily spending of government.

Government also had a term deposit of $2.6m with the Tonga Development Bank and the Reserve Bank. There was still $4.0m left in the Emergency Fund. The government also had $104.7m of assets.

Meanwhile, government still owed the Retirement Fund $16.7m out of over $30 million that government had previously owed the retirement fund.

Aid supported revenue

After the aid input was included in the revenue, the Prime Minister Lord Tu'ivakano pointed out that during the first six months of the current financial year from 1 July to 31 December 2010 government had a surplus of $903,839.

In order for the government revenue to grow, he identified two specific areas that his government would have to deal with.

He pointed out that government owned 12 enterprises with a total equity amounting to $264,440,000. But at the end of the 2009 financial year these enterprises made only $889,600 profit, or about 0.3% of the government investment. He said that his government aimed to increase the profits from 0.3% to 10%.

The other areas of major concern were the allocation of government revenue for the salaries of civil servants, currently at 49%. He said that a limit had been set at 51% but he wanted to reduce it to 45%.

He stressed that the corner posts of the Tongan society are a healthy life, education, security and law and order.

He said a goal was that by 2020 Tonga would be the healthiest country among the Pacific Islands.

The Speaker, Lord Lasike, after the evening over-time session sent the members away on an indefinite "honeymoon". He said they would decide when to reconvene.

It is expected that the House will reconvene in May to work on the Budget for the new financial year. 2011-12.