The National Reserve Bank of Tonga Board in its monthly meeting on the 7th June 2017 approved to maintain the current accommodative monetary policy stance. 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. These accommodative monetary policy measures are:
- 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, stated that in March the local partial indicators reflected mixed growth in the domestic economy. In terms of exports in the primary sector, the agricultural exports increased whilst marine exports declined. The on-going construction works signals continued strong growth in the secondary sector. However, the services sector indicated slow growth over month as container registrations decreased by 2.4%, international air arrivals declined by 3.7% although the arrival of two cruise ships may have supported the tourism sector.
The banking system remained sound maintaining strong capital position, supported by comfortable profitability, and continued low non-performing loans. Banking system liquidity declined over the month which was in line with the fall in the foreign reserves. The loans to deposit ratio of banks therefore rose over the month to 75.5% in March from 73.3% in February but still remained below the 80% minimum target which indicate that excess liquidity in the banking system remains and capacity for further lending by the banks exist. The foreign reserves fell by $11.6 million over the month to $366.0 million due mainly to higher payments for the import of oil and wholesale & retail goods which was partially offset by higher remittance receipts for family support. This is equivalent to 6.71 months1 of import cover, which is still above the Reserve Bank’s minimum range of 3 – 4 months.
Notably, the annual headline inflation rate rose significantly in the year ended March 2017 by 9.4%. This was due mainly to the new customs duty and excise tax introduced in July 2016 which largely drove the 13.2% rise in imported prices. Annual domestic inflation rate also increased by 4.9% due mainly to the continued short supply of kava-Tonga and volatile local food prices.
Nonetheless, 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 amendments made to custom 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.
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 ki he fokotu’utu’u ngāue fakapa’anga lolotonga´, hili ia ‘enau fakataha na’e fakahoko ‘i he ‘aho 7 ‘o Sune 2017. ‘Oku fakataumu’a eni ke ne faka’ai’ai mo pātoloaki ‘a e ngaahi ngāue faka’ekonōmika ‘a e fonua´. Ko e ngaahi tu’utu’uni ki he fokotu’utu’u ngāue fakapa’anga lolotonga ‘eni:
- 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 pe ‘a e ngaahi ngaue faka’ekonōmika fakalotofonuá ‘i Ma’asi 2017. Fakatatau ki he ola ‘o e uta ngoue mo e toutai ki mulí, na’e hiki hake ‘a e lahi ‘o e ngoue na’e uta atu, kae holo ‘a e toutaí. ‘Oku tokoni ‘a e ngaahi ngāue langa ‘oku lolotonga fakahoko ke hokohoko atu ai pe ‘a e tupu ‘i he sekitoa ‘o e fakatupu koloá (secondary sector). Na’e ‘i ai ‘a e holo ‘i he tupu ‘a e ngaahi ngaue ‘i he sekitoa ki he ngaahi ngāue (tertiary sector) ‘i he lolotonga ‘o e mahiná. Na’e ha eni ‘i he holo ‘a e lahi ‘o e ngaahi koniteina ‘oku hū mai mei mulí ‘aki ‘a e peseti ‘e 2.4, holo ‘a e tu’uta vakapuna mai ki Tonga ní mei tu’apule’angá ‘aki ‘a e peseti ‘e 3.7, neongo ‘a e kaunga lelei ‘a e tu’uta mai ‘a e vaka meili ‘e ua ‘i Ma’así ki he sekitoa takimamatá.
‘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 holo ‘a e lahi ‘o e pa’anga ngaue ‘a e ngaahi pangikē (liquidity) ‘i he lolotonga e māhina ko Ma’asi ‘a ia ne ha heni ‘a e holo ‘a e pa’anga talifaki ‘i mulí (foreign reserves). Na’e ‘alu hake leva ‘a e peseti ‘o e ngaahi nō ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa’angá (loan/deposit ratio) ki he peseti ‘e 75.5 ‘i Ma’asi mei he peseti ‘e 73.3 ‘i Fepueli ka na’e kei ma’ulalo pe eni ‘i he tu’unga ma’ulalo taha 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 pe ‘a e faingamālie ke toe fakalahi ‘a e ngaahi nō ke tuku atu ‘e he ngaahi pangikē. Na’e holo ‘a e pa’anga talifaki ‘i mulí (foreign reserves) ‘aki ‘a e $11.6 miliona ki he $366.0 miliona ‘i he faka’osinga ‘o Ma’así, makatu’unga mei he lahi ange ‘a e totongi ki hono hū mai ‘o e koloa mei muli pea mo e lolo (import of wholesale & retail goods and oil) ‘a ia ne laka hake eni ‘i he ngaahi talafi pa’anga taautaha mei mulí (personal remittances). Na’e fe’unga ‘a e tu’unga ‘o e pa’anga talifaki´ ‘i he faka’osinga ‘o Ma’asi mo e māhina ‘e 6.71 ‘o e koloa mo e ngaahi ngāue hū mai mei muli´1 (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 mo e ngaahi ngāue hū mai mei muli´.
Na’e hokohoko atu ai pē ‘a e hikihiki ‘i he totongi koloa fakata’ú, ‘o hiki ‘aki e pēseti ‘e 9.4 ‘i he faka’osinga ‘o e ta’ú ki Ma’asi 2017. Na’e makatu’unga eni mei he ngaahi totongi tute fo’ou ne kamata ngaue’aki ‘i Siulai 2016 ‘a ia na’e tokoni ia ki hono hiki’i hake ‘a e totongi ‘o e ngaahi koloa hū mai mei mulí ‘aki ‘a e peseti ‘e 13.2. Na’e hiki hake foki mo e totongi koloa fakalotofonua fakata’ú ‘aki ‘a e peseti ‘e 4.9 makatu’unga mei he si’isi’i ange ‘a e lahi ‘o e kava-Tongá pea mo e lahi e fetō’aki ‘i he totongi ‘o e koloa me’akai fakalotofonuá.
‘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 ‘i he ta’u fakapa’anga 2017/18 ki he tu’unga fe’unga ‘oku fiema’u ‘e he Pangikē Pulé ‘a ia ko e pēseti ‘e 5. ‘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.
