The impact of TC Harold, and the border remains closed until mid-June, the Reserve Bank is projecting an economic downturn for Tonga in 2019/20. This may continue to 2020/21 depending on the duration of the COVID-19 pandemic. On the outlook for June 2020, foreign reserves is expected to remain at sufficient levels above the minimum of 3 months of import cover, sustained by the inflow of budget support and other relief funds from donor partners. Inflation is forecasted to gradually pick up yet remain below the Reserve Bank’s reference rate of 5%. The banking system is still expected to remain sound with a slowdown in credit growth. Monetary policy stance remains accommodative in support of domestic activities, macroeconomic growth, and mitigating the impacts of COVID-19 on the economy. The Reserve Bank remains vigilant by closely monitoring the financial and economic indicators for any sign of vulnerability and stands ready to adjust its monetary policy setting if required.

The impact of TC Harold, and the border remains closed until mid-June, the Reserve Bank is projecting an economic downturn for Tonga in 2019/20. This may continue to 2020/21 depending on the duration of the COVID-19 pandemic. On the outlook for June 2020, foreign reserves is expected to remain at sufficient levels above the minimum of 3 months of import cover, sustained by the inflow of budget support and other relief funds from donor partners. Inflation is forecasted to gradually pick up yet remain below the Reserve Bank’s reference rate of 5%. The banking system is still expected to remain sound with a slowdown in credit growth. Monetary policy stance remains accommodative in support of domestic activities, macroeconomic growth, and mitigating the impacts of COVID-19 on the economy. The Reserve Bank remains vigilant by closely monitoring the financial and economic indicators for any sign of vulnerability and stands ready to adjust its monetary policy setting if required.

The Reserve Bank projects the foreign reserves to remain at sufficient levels above the minimum of 3 months of import cover sustained by expected receipts of budget support. Inflation is forecasted to stay below the Reserve Bank’s reference rate of 5% as global oil prices are expected to fall and partially offset the expected increases on other imported goods. Meanwhile, credit growth is projected to continue at a slower pace. The Reserve Bank maintains its accomodative monetary policy stance for the near to medium term. Additional measures have been put in place to assist the Government and the commercial banks in their economic relief efforts through moratorioums and encouraging the utilization of the excess liquidity in the banking system to support economic activities and growth. The Reserve Bank remains vigilant by closely monitoring developments of COVID-19 in the domestic and global economies and stands ready to adjust its monetary policy setting to ensure financial and macroeconomic stability are maintained.

The Reserve Bank estimates the foreign reserves to remain at sufficient levels above the minimum of 3 months of import cover. Inflation is forecasted to stay below the Reserve Bank’s reference rate of 5% as global oil prices are expected to fall and partially offset the expected increases on other imported goods. Credit growth is also projected to slow down eventually. In light of the recent developments, the Reserve Bank maintains its accommodative monetary policy stance at this time to encourage the utilization of the excess liquidity in the banking system for further lending to support economic activities and growth. The Reserve Bank continues to be vigilant in closely monitoring developments in the domestic and global economies and stands ready to adjust its monetary policy setting to ensure financial and macroeconomic stability are maintained.

The Reserve Bank maintains its accommodative monetary policy stance at this time to encourage the utilization of the excess liquidity in the banking system for further lending to support economic activities and growth. The Reserve Bank continues to be vigilant in closely monitoring developments in the domestic and global economies and stands ready to adjust its monetary policy setting to ensure financial and macroeconomic stability are maintained.

The Reserve Bank expects a general slowdown in domestic economic activity for the medium term. Foreign reserves are projected to remain at comfortable levels above the minimum of 3 months of import cover. The inflation rate is forecast to remain relatively low yet stable and below the Reserve Bank’s reference rate of 5%. Credit growth will continue to grow albeit at a slower pace, underpinned by excess liquidity in the banking system. The Reserve Bank, therefore, maintains its accommodative monetary policy stance to encourage the utilization of the excess liquidity in the banking system for further lending to support economic activities. Nonetheless, the Reserve Bank continues to be vigilant in closely monitoring developments in the domestic and global economies and stands ready to adjust its monetary policy setting to ensure financial and macroeconomic stability are maintained. 

The Reserve Bank’s outlook for strong domestic economic activity remains in the medium term. The level of foreign reserves is expected to remain at comfortable levels, supported by expected receipts of budgetary support and grant funds from development partners, higher receipts of remittances and the deferment of the principal loan repayment to the EXIM Bank of China. This will be partially offset by the anticipated increase in imports. Inflation is expected to fall below the Reserve Bank’s inflation reference rate of 5% per annum at the beginning of 2019, subject to changes in the rebasing of inflation. The Reserve Bank will continue to closely monitor developments in the domestic and global economies to ensure financial and macroeconomic stability are maintained and to change its monetary policy setting where necessary to support its monetary policy objectives.

The Reserve Bank still expects positive domestic economic activity in the medium term. Foreign reserves is at comfortable levels way above the minimum of 3 months of imports cover, while inflation is below the Reserve Bank’s reference rate of 5%. Credit growth is expected to continue growing underpinned by excess liquidity in the banking system although at a slower pace as well as new strategies by the commercial banks. The Reserve Bank considers its current accommodative monetary policy stance appropriate at this time. However, the Reserve Bank continues to be vigilant in closely monitoring developments in the domestic and global economies and stands ready to adjust its monetary policy setting to ensure financial and macroeconomic stability are maintained. 

The Reserve Bank continues to expect positive domestic economic activity in the medium term. Foreign reserves remain at comfortable levels above the minimum of 3 months of imports cover, while inflation is below the Reserve Bank’s reference rate of 5%. Credit growth is expected to remain strong underpinned by excess liquidity in the banking system and banks new strategies and competition for lending. The Reserve Bank considers its current accommodative monetary policy stance appropriate at this time. However, the Reserve Bank continues to be vigilant in closely monitoring developments in the domestic and global economies and stands ready to adjust its monetary policies, to ensure financial and macroeconomic stability are maintained.

The Reserve Bank still expects domestic economic activity to remain positive in the medium term. Foreign reserves is at comfortable levels above the minimum of three months of imports cover, and inflation is below the Reserve Bank’s reference rate of 5%. The Reserve Bank considers its current accommodative monetary policy stance to still be appropriate at this time. Nevertheless, the Reserve Bank continues to closely monitor developments in the domestic and global economies and stands ready to adjust its monetary policies, to ensure financial and macroeconomic stability are maintained.