Steven Edwards and Siosi Mafi

A continue decline of Tonga's foreign currency earnings has stifled the growth of the Tongan economy, the Governor of the National Reserve Bank of Tonga, Mrs Siosi Mafi said this morning, May 31.

Foreign remittances from overseas Tongans, the main source of Tonga's foreign currency earning had declined by $32.2 million in a year.  Tonga's total remittances for the year at the end of March 2012 was $122.4 million, and $32.2 million less than at the end of March 2011, she said.

To boost Tonga's foreign currency earnings there had been attempts to revitalize Tonga's main export industries, Agriculture, Fisheries and Tourism, which are in desperate need of government financial assistance, and private sector investments to put them back into commercial operation.

Siosi pointed out that government was heavily reliant on foreign aid and grants to build infrastructure such as roads and hospitals and even to balance its annual budget.

"This is the second year that aid donors provided budget support funding to balance the national budget," said Siosi. She did not think that it is a stable source of fund for Tonga to rely on to balance its national budget.

The Chairman of the Board of Directors of the Reserve Bank, Steven Edwards was optimistic that tourism could inject some life into the Tongan economy, though he admitted that there was still a lot of work to be done.

He said that Tonga has the potential to attract more cruise ships. Last year only five cruise ships called into Tongatapu and Vava'u. He believed that these figures could be increased to 20, and they could visit the three main groups of Tongatapu, Ha'apai and Vava'u.

With regards to an Economic Dialogue that was hosted by the Reserve Bank early this year, and whether government had addressed some of the concerns that were raised at the dialogue, Siosi said that government had started working on some, such as trying to find a market for agricultural produce.

The Governor stressed that the Reserve Bank's two main responsibilities are:

1. To make sure that the Foreign Reserve is the equivalent of four months of imports.

2. To reduce inflation.

At the end of March the Tonga's Foreign Reserve was $239.2 million, the equivalent of eight months of imports, and inflation was 1.8%.