Results for Economy and Trade

A new customs duty and excise tax introduced last year has driven import prices up causing inflation to hit significantly high levels in Tonga. Annual inflation rose by 10% over the year to May 2017 - well above the National Reserve Bank of Tonga's reference rate of 5%.

An inspection shed for handicrafts of the Ministry of Agriculture, Food, Forest, Fisheries and PHAMA program was opened on Friday, June 16 to support people involved in the industry and increase exports.

Tonga needs to act fast in creating a plan to take advantage of the Pacific Agreement on Closer Economic Relations PACER Plus, between 12 Pacific Island Countries, plus Australia and New Zealand, said ‘Anisi Kulu Bloomfield, the Acting Chief Executive Officer of Tonga’s Ministry of Labour, Commerce and Trade.

Two key challenges that the Tongan government faces now are to manage carefully its wages bill and also its financing of the 2019 South Pacific Games related constructions. The World Bank also believes that Tonga should undergo an economic reform to shore up its revenue, “contain unproductive spending while boosting critical expenditures on health and education, and build up buffers against shocks.”

The International Monetary Fund (IMF) said in a preliminary statement this week that Tonga’s “economic activity is expanding and likely to remain relatively strong into the next couple of years”. However, the IMF found that there was a lack of recent statistical information available such as government finance, inflation, balance of payments, and national accounts data for their assessment of economic development.

Economic forecasts show that while the Tongan economy is expected to grow by 3.1 % in the current financial year up to 30 June 2017, it will not maintain that growth rate.

Tonga has decided to adopt daylight saving and will advance its clock one hour ahead on Sunday, November 6 for two-months, in order to allow more daylight hours in the evening during the longer summer days. The change will put Tonga 14 hours ahead of UTC during the summer.

In its latest state of the economy report, the International Monetary Fund (IMF) has called on Tonga to improve its debt management, make broader reforms to increase revenue, and to effectively manage public spending. In the IMF's 2016 Article IV report released this week, Tonga was also encouraged to continue to seek concessional and grant financing for the South Pacific Games, while the report welcomed Tonga's efforts in curbing the wage bill and avoiding cost overruns. It urged Tonga to provide more opportunities for private sector development.

Tonga’s bankers, who fought to stop the imposition of a new Foreign Exchange Levy that came into effect today June 1, say the legislation is poorly drafted and imposes an unfair tax on the financial sector, which will be passed on to the community – particularly affecting remittances.