Negotiation continues on rescheduling Tonga's loan from China [1]
Tuesday, December 3, 2013 - 20:13
The rescheduling of Tonga's T$119 million loan from China for the reconstruction of Nuku'alofa has not been decided, according to Xu Zhiguang, the first Secretary of the Chinese Embassy, Nuku'alofa this afternoon, December 3.
Tonga was scheduled to start repaying its loan to China on 25 September 2013, but Xu Zhiguang said that the negotiation was still on-going and a decision would be announced once the negotiation was concluded.
He was surprised to learn that a report released this week by the Asian Development Bank stated that the repayment of the Tongan government loan from the Export-Import Bank of China had been rescheduled.
The ADB ‘Pacific Economic Monitor’ for December 2013, Country Economic Updates, which looked at key issues for Tonga, stated that “Government debt servicing commitments have moderated following rescheduling of repayment of the Export-Import Bank of China loans.”
According to the report Tonga's public debt in 2013 remains at about 43% of its GDP. “More than 90% of Tonga's debt is to external creditors, and most of it is in Chinese Yuan to the Export-Import Bank of China.”
Airport land
The ADB Pacific Economic Monitor also reported a fiscal deficit in budget performance during 2013, when Tonga’s fiscal deficit was 1.0% of its GDP, compared with a budgeted surplus of 0.1%.
“This was due to a supplementary budget allocation to fund land purchases for airport development, and lower than expected external grants.”
The deficit was partly contained by reductions and under-spending in government's recurrent expenditures.
Tax collection
However the report stated a good performance in tax revenue collections, which were 38% above target. These collections helped offset shortfalls in non-tax revenue.
Private sector credit continues to decline and lending to businesses fell by 16.1% in June 2013.
Visitor arrivals have also increased during recent months due to growth in the expatriate Tongan market.
There was also a growth in remittances for the first time in four years, when remittances grew by 5.5% for 2013, the ADB Pacific Economic Monitor reported.