The National Reserve Bank of Tonga’s board of directors at its meeting on the 31st July 2017 approved to maintain its current monetary policy measures outlined below. This is to encourage utilisation of the excess liquidity in the banking system, through further lending in order to support economic growth, and strengthen the monetary policy transmission mechanism.
- maintain the monetary policy rate at 0% (zero interest rate policy);
- maintain the minimum loans/deposit ratio of 80%;
- maintain the Statutory Reserve Deposit ratio at 10% effective in July 2017; and
- maintain the inflation reference rate at 5%.
The Governor of the Reserve Bank, Sione Ngongo Kioa, highlighted that the local partial indicators for May 2017 reflected mixed growth in the domestic economy. Performance in the primary sector improved where the agricultural exports rose due mainly to higher exports of root crops. The activities in the secondary sector continued to grow as reflected in the continued growth in housing loans over the month supporting the construction sector. The services sector indicated strong growth over the month as container registrations rose by 24.5%, and international air arrivals increased by 21.0%.
The banking system remained sound maintaining strong capital position, supported by comfortable profitability, and continued low non-performing loans. Liquidity in the banking system (reserve money) increased over the month to $284.8 million due mainly to higher cash deposits made by the commercial banks to the Reserve Bank vault. The loans to deposit ratio of banks remained below the 80% loan to deposit ratio target which indicate that excess liquidity in the banking system remains and the capacity for further lending by the banks exists. Furthermore, the weighted average interest rate spread narrowed slightly to 5.682% in May due to a decline in the weighted average lending rate which outweighed a fall in the weighted average deposit rate. The foreign reserves rose by $20.6 million to $392.3 million in May 2017 due mainly to the receipt of the budgetary support and grants by Government during the month. This is equivalent to 7.2 months of import cover, which is still above the Reserve Bank’s minimum range of 3 – 4 months.
The annual headline inflation rose by 10.0% over the year to May 2017. This was due to mainly to a 11.8% rise in imported prices which largely reflected the impact of the new customs duty and excise tax introduced in July 2016. Similarly, the domestic annual inflation rate rose by 7.8% largely driven by the seasonality of local food, rise in electricity price, and the continued short supply of kava-Tonga.
The Reserve Bank’s expectation for strong economic activity remains in the near term. The level of foreign reserves is also projected to remain adequate supported by estimated higher receipts of remittances and foreign aid and this will be partially offset by the expected increase in imports. Upward inflationary pressure remains in the near term due mainly to the impact of the new customs duty and excise tax effective on 1st July 2016, although it is expected to fall below the Reserve Bank’s inflation reference rate of 5% per annum in 2017/18. However, adverse weather conditions and higher import prices poses a risk to these favorable projections.
The Governor concluded that the Reserve Bank will continue to closely monitor developments in the domestic and global economy and update its monetary policy setting, to maintain internal and external monetary stability, and to promote a sound and efficient financial system in order to support macroeconomic stability and economic growth. The Reserve Bank will also remain vigilant and continue to closely monitor developments for early signs of vulnerabilities which may indicate overheating of the economy.
Tu’utu’uni ki he Fokotu’utu’u Ngāue Fakapa’anga
Na’e tali ‘e he Poate ‘a e kau Talēkita ‘a e Pangikē Pule Fakafonua ‘o Tonga´ ke kei hokohoko atu ai pē ‘a e ngaahi tu’utu’uni ngāue fakapa’anga lolotonga´ ‘a ia ‘oku hā atu΄, hili ia ‘enau fakataha na’e fakahoko ‘i he ‘aho 31 ‘o Siulai 2017. ‘Oku fakataumu’a eni ke ne faka’ai’ai mo pātoloaki ‘a e ngaahi ngāue faka’ekonōmika ‘a e fonua´.
- Ke kei hoko atu pe hono ta’etotongi tupu ‘a e pa’anga ngāue ‘a e ngaahi pangiké (Exchange Settlement Account) ‘oku fakahū ‘i he Pangikē Pulé;
- Ke ‘oua e toe ma’ulalo hifo he pēseti ‘e 80 ‘o e lahi e ngaahi nō ‘oku tukuatu ‘ehe ngaahi pangike ‘o fakahoa ki he lahi ‘o ‘enau ngaahi fakahū pa’angá (loan/deposit ratio);
- Ke hiki hake e lahi ‘o e pa’anga ‘a e ngaahi pangiké fakakomesiale, ‘oku tu’utu’uni fakalao ke tauhi ‘i he Pangikē Pulé (Statutory Reserve Deposit) ‘i he pēseti ‘e 10 ‘o kamata ‘i Siulai 2017; pea
- Ke tu’uma’u pē ‘a e fakaámu ki he hikihiki e totongi ‘o e ngaahi koloá ‘i he pēseti ‘e 5 ‘i he ta’u.
Na’e fakahā ‘e he Kōvana ‘o e Pangikē Pulé, Sione Ngongo Kioa, na’e fetō’aki pē ‘a e ngaahi ngāue faka’ekonōmika fakalotofonuá ‘i Mē 2017. Fakatatau ki he ola ‘a hono uta atu e ngoue ki mulí, na’e hiki hake tupu mei he lahiange ‘a e ‘akau foha ne utu ‘i he lolotonga e mahina΄. ‘Oku hokohoko atu ai pē tupu ‘a e ngaahi ngāue ‘i he sekitoa ‘o e fakatupu koloá ‘a ia ‘oku ho’ata mai mei he lahi ange ‘a e nō langa fale taautaha ‘i he mahina ni, ‘a ia ‘oku tokoni ia kihe tupu ‘a e sekitoa langa΄. Na’e hiki hake mo e tupu ‘i he sekitoa ki he ngaahi ngāue (tertiary sector) ‘i he lolotonga ‘o e mahiná, ‘a ia na’e hiki ‘a e lahi ‘o e ngaahi koniteina ‘oku hū mai mei mulí ‘aki ‘a e peseti ‘e 24.5, pea kake ‘a e tu’uta vakapuna mai ki Tonga ní mei tu’apule’angá ‘aki ‘a e peseti ‘e 21.0.
‘Oku kei ‘i he tu’unga lelei ‘aupito ‘a e fai fatongia ‘a e ngaahi pangikē fakakomēsialé, ‘o makatu’unga mei he tu’unga fakafiemālie ‘a ‘enau tu’unga tupú (profitability) pea pehē ki he kei ‘i he tu’unga mā’ulalo ai pē ‘a e ngaahi nō ‘oku palopalemá. Na’e hiki hake ‘a e pa’anga ngāue (liquidity) ‘a e ngaahi pangikē ki he $284.8 miliona, ‘o tupu ia mei he lahiange ‘a e fakahū pa’anga ‘a e ngaahi pangikē fakakomēsialé ki he Pangike Pulē ‘i he lolotonga ‘o e mahina ko Mē. ‘Oku kei ma’ulalo pē ‘a e lahi ‘o e ngaahi nō ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa’angá (loan/deposit ratio) ‘i he tu’unga kuo tu’utu’uni ‘e he Pangike Pule´ ke a’usia ‘e he ngaahi pangike´, ‘a ia ko e pēseti ‘e 80. ‘Oku hā mahino mei heni ‘a e kei ‘i ai pē ‘a faingamālie ke toe fakalahi ‘a e ngaahi nō ke tuku atu ‘e he ngaahi pangikē. Na’e holo si’i ‘a e hulu ‘i he 'avalisi 'o e totongi tupu 'i he nō mo e 'avalisi 'o e totongi tupu 'i he fakahū pa'anga´ (weighted average interest rate spread) ki he peseti ‘e 5.682 tupu mei he lahi ‘a e holo ‘i he ‘avalisi ‘o e totongi tupu ‘i he nō (weighted average lending rate) ‘o fakatatau ki he holo ‘a e ‘avalisi ‘o e totongi tupu ‘i he fakahū pa’anga΄ (weighted average deposit rate). Na’e hiki hake ‘a e pa’anga talifaki ‘i mulí (foreign reserves) ‘aki ‘a e $20.6 miliona ki he $392.3 miliona ‘i he faka’osinga ‘o Mē, makatu’unga mei he hū mai ‘a e ngaahi pa’anga tokoni ki he patiseti ‘a e Pule’anga΄. ‘Oku fe’unga ‘a e tu’unga lolotonga ‘o e pa’anga talifaki´ pea mo e māhina ‘e 7.2 ‘o e koloa mo e ngaahi ngāue hū mai mei muli´ (import), ‘a ia ‘oku kei mā’olunga pē eni ‘i he tu’unga ma’ulalo taha ‘oku fiema’u ‘e he Pangikē Pule´, ‘a ia ko e māhina ‘e 3 ki he 4 ‘o e koloa hū mai mei muli´.
‘Oku hokohoko atu ai pē ‘a e hikihiki ‘i he totongi koloa fakata’ú, ‘o hiki ‘aki e pēseti ‘e 10.0 ‘i he faka’osinga ‘o e ta’ú ki Mē 2017. ‘Oku makatu’unga ‘a e hiki fakata’u ko ‘ení mei he ngaahi totongi tute fo’ou ne fakahoko ‘i Siulai 2016, ‘a ia na’a ne hiki’i hake ai ‘a e totongi ‘o e ngaahi koloa hū mai mei mulí ‘aki ‘a e peseti ‘e 11.8. Na’e hiki hake foki mo e totongi koloa fakata’ú fakalotofonuá ‘aki ‘a e peseti ‘e 7.8 makatu’unga mei he lahi e fetō’aki ‘i he totongi ‘o e koloa me’akai fakalotofonuá, hiki e totongi ‘o e ‘uhila΄, pea mo e si’isi’i ange ‘a e lahi ‘o e kava-Tongá.
‘Oku kei fakafuofua pē ‘e he Pangikē Pulé ‘e mālohi ‘a e tupu faka’ekonōmika fakalotofonuá ‘i he kaha’u. Ko e pa’anga talifaki ‘i mulí ‘oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie pē. ‘Oku makatu’unga eni mei he fakafuofua ‘e kei ‘i he tu’unga mā’olunga ai pē ‘a e ngaahi talafi pa’anga mei mulí pea pehē ki he pa’anga tokoni mei he ngaahi hoa ngāue langa fakalakalaká, neongo ‘e ala uesia ‘a e fakafuofua ko ‘ení mei he fakafuofua ‘e toe lahi ange mo e totongi ‘o e koloa hū mai mei mulí. ‘Oku toe fakafuofua ‘e kei hokohoko atu ai pē ‘a e hikihiki ‘i he totongi koloá ‘i he kaha’u vave maí, ‘o makatu’unga mei he ngaahi totongi tute fo’ou ne fakahoko ‘i Siulai 2016, pea ke toki holo ki he tu’unga fe’unga ‘i he fakafuofua ‘a e Pangikē Pulé (reference rate) ‘i he ta’u fakapa’anga 2017/18 ‘a ia ko e pēseti ‘e 5. Ka neongo ia ‘oku malava ke uesia ‘a e ngaahi fakafuofua ko ’eni mei he feliliuaki ‘o e ‘eá, pea mo ha toe ma’olunga ange ‘a e totongi koloa hū mai mei mulí.
Na’e aofangatuku ‘e he Kovana΄, ‘e kei hokohoko atu ai pē ‘a e tokanga ‘a e Pangikē Pulé ki hono siofi mo muimui’i ofi e ngaahi fakalakalaka faka’ekonōmika fakalotofonuá mo tu’apule’angá, mo tu’u mateuteu ke liliu ‘a e ngaahi fokotu’utu’u ngāue fakapa’angá ‘o ka fiema’u, ke tauhi e ma’uma’uluta ‘a e tu’unga fakapa’angá pea mo langa hake ha sisitemi fakapa’anga ‘oku malu mo lelei pea mo fakapapau’i ‘e ‘ikai ke toe kaunga kovi ‘a e ngaahi fakalakalaka ‘oku hoko´ ki he tupu faka’ekonomika ‘oku ma’uma’uluta mo tolonga.
