Overseas Exchange Transactions for November 2018

Official transfer receipts further boost OET surplus in November


Overseas Exchange Transactions
Net Change to Foreign Reserves (TOP$ millions)

  Month Ended Year Ended
  Nov 18
Oct 18
Sep 18
Aug 18
Nov 18
Nov 17


Overall balance
11.4 5.1 -22.8 -1.5 43.9 63.8
Net Current Account
21.2 0.5 -16.9 -5.7 17.2 46.7
Net Capital Account
1.0 1.3 2.9 2.4 33.2 38.3
Net Financial Account -10.9 3.3 -8.8 1.8 -6.6 -21.2
Foreign Reserves Levels 468.7 457.3 452.2 475.0 468.7 424.8

Sources: Banking system | National Reserve Bank of Tonga

Overall Balance & Foreign Reserve

The balance of the overall OET rose further by $6.2 million in November 2018 to a surplus of $11.4 million, owing mostly to an increase in the official transfer receipts. Government receipts from development partners over the month drove the higher surplus in the current account. This further contributed to a rise in the official foreign reserves to $468.7 million in November, equivalent to 8.1 months of import cover. Over the year, the overall OET surplus balance declined by $19.9 million to $43.9 million. This was attributed mainly to the widening merchandise trade deficit fueled by higher import payments.

Looking ahead, the Reserve Bank continues to project that the level of foreign reserves will remain at a comfortable level and above the 3 months of import cover. This is expected to be supported by higher receipts of remittances and foreign aid. However, possible further delays to the inflow of aid and budget support from development partners combined with the pace of development in the domestic economic activities, may pose a risk to the foreign reserves outlook. Global uncertainties regarding oil and commodities prices paired with Tonga’s vulnerability to natural disasters are also risks to the projections above.

Current Account

The current account balance improved further over November and recorded a higher surplus of $21.2 million. This resulted mainly from higher transfers particularly official receipts which increased by $12.7 million in November and stemming largely from government receipts for the purposes of budget support and project funds from development partners. Additionally, a decline of $7.5 million in the merchandise trade deficit also supported the higher current account surplus due to lower import payments for wholesale & retail goods, construction goods, and other imports. Furthermore, export proceeds continued to rise reflecting receipts of squash export proceeds.

Net service receipts recorded a lower surplus over the month in line with the decline in travel receipts. Similarly, the income balance recorded a lower surplus due to lower receipts of compensation of employees.

Over the year, the current account surplus declined by $29.4 million to $17.2 million. This resulted mainly from widening deficits in the merchandise trade account. The higher payments for imported wholesale & retail goods, oil, other imports, and vehicles produced a higher merchandise trade deficit. This was reflected also in higher container registrations which rose by 1,024 containers indicating a busy trade sector. On the other hand, all categories of exports declined except for other marine exports. Meanwhile, the lower service account surplus further contributed to the declining current account surplus. These movements had offset the improved surpluses recorded for the income and official transfer accounts. Fewer payments of dividend funds offshore lead to the net income receipt over the year, whilst the inflow of budget support and government grants boosted the net transfer receipts.

Capital Account

The surplus in the capital account fell slightly to a balance of $1.0 million in November. This was due mainly to a $1.0 million decline in official capital receipts compared higher receipts of government grants for capital projects in the previous month. Meanwhile, receipts of funds for private capital investment increased which had partially offset the monthly decline in the overall capital account surplus.

Over the year, the capital account continued to maintain its position of holding the highest share in the overall OET balance surplus despite decreasing by $5.1 million to $33.2 million. The lower capital account surplus attributes mostly from a decline in net private capital receipts of $7.9 million, outweighing the $2.8 million increase in net official capital receipts. These capital receipts by both Government and the private sector were for investment projects and capital expenditures. Additionally, this included construction and on-going government projects such as the Tonga Transport Sector Consolidation road maintenance projects and the renovation work at Fua’amotu Airport under the Pacific Aviation Investment Program.

Financial Account

The financial account balance decreased and recorded a deficit for the month and over year to November. This is caused largely by the decline in other investments particularly interbank payments. Annually, the financial account registered a deficit although it improved from the previous year.


Overseas Exchange Transactions Releases

Overseas Exchange Transactions Releases for 2018


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2016


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2015


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pdfIcon October
Released on 29 January 2016 | 494 KB
pdfIcon September
Released on 27 January 2016 | 518 KB

pdfIcon August
Released on 8 January 2016 | 288 KB
pdfIcon July
Released on 22 December 2015 | 312 KB

pdfIcon June
Released on 9 December 2015 | 554 KB
pdfIcon May
Released on 6 October 2015 | 630 KB

pdfIcon April
Released on 15 July 2015 | 653 KB
pdfIcon March
Released on 3 June 2015 | 672 KB

pdfIcon February
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2014


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