Results for Economy

Tonga’s $15.2 million pa'anga loan repayment due to the EXIM Bank of China, during the 2020-21 financial year, has been deferred to 2021-22, the Minister of Finance, Hon. Tevita Lavemaau, confirmed yesterday 16 February.

The IMF has approved US$9.95 million under its Rapid Credit Facility, to help meet Tonga’s “urgent balance of payments and fiscal needs arising due to the COVID-19 pandemic and Cyclone Harold.” Tonga's early closure of external borders had helped avoid a worse economic outcome. “Nevertheless, an economic contraction is expected in FY2021.”

Tonga will receive US$8.4m from the World Bank with US$5.5m allocated to improve management of its public finances, boost resilience to the effects of climate change, and provide better access to skills training for labor opportunities domestically and internationally, and US$2.9m will go towards Tonga's CoViD-19 response.

The negative impacts of CoViD-19 will lead to a contraction in economic growth for the current fiscal year, the Governor of the National Reserve Bank of Tonga, Dr Sione Ngongo Kioa stated on 5 May, as domestic activities have already shown a slowdown.

A $460,000 pa’anga grant to the Government of Tonga was approved by the Asian Development Bank (ADB) on Friday, 1 May and will go towards restoring life-sustaining services following the damage from Tropical Cyclone Harold.

Overseas remittances are predicted to fall by 13 percent in the East Asia and Pacific region this year affecting countries such as Tonga, due to the economic crisis caused by CoViD-19, according to the World Bank. Migrant remittances to Tonga in 2019 made up 37.6 percent as a share of GDP.

A $60 million pa'anga economic and social stimulus package to counter the impact of CoViD-19 was announced by the Tongan government today, 2 April. The package will provide short-term financial assistance for all sectors of the Tongan economy. Tonga expects fiscal deficits of $35m 2020 and $54m in 2021.

Many of Tonga's businesses are already facing a cash crunch and looking to scale back their operations, as the impact of the CoViD-19 pandemic bites, the Tonga Chamber of Commerce and Industries (TCCI) stated today. While the National Reserve Bank of Tonga has reassured Tongans that our banking system is strong enough to withstand the impact of CoViD-19, but economic growth will be lower for the year.

Tonga’s growth potential is below what it could be. The economy has been growing well below the regional average for the past two decades, says an IMF Staff report released on February 24. Growth is expected to gradually decline “unless there is a concerted effort to remove bottlenecks hampering private sector development.”