The Reserve Bank of Tonga Board approved at its monthly meeting on the 27th April 2017 to maintain the current accommodative monetary policy stance. This is to encourage the utilisation of the excess liquidity in the banking system to increase lending in order to support economic growth and strengthen the monetary policy transmission mechanism. The following are the accommodative monetary policy measures:
- 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 Acting Governor of the Reserve Bank, Jessie Cocker in announcing the Board decision highlighted that the domestic economy picked up in February after slow growth was recorded in the previous month. This trend is similar to previous years. The recovery was supported by an improved agricultural sector, on-going construction works and positive growth in the distribution sector.
The foreign reserves on the other hand fell over the month to $377.7 million due to the deficit in the Overseas Exchange Transactions (OET) overall position. This is equivalent to 7.1 months of import cover, which is still above the Reserve Bank’s minimum range of 3 – 4 months. The annual inflation rate increased significantly by 8.9% in the year ended February 2017. This was due mainly to the new customs duty and excise tax introduced in July 2016 which largely drove the 10.5% rise in imported prices. Annual domestic inflation rate also rose by 6.8% due mainly to the continued short supply of kava-Tonga and volatile local food prices.
The banking system remained sound with strong capital position maintained, supported by comfortable profitability, and non-performing loans continued to remain low. The lower deposits in February coincided with the fall in the foreign reserves and rise in net domestic assets. The loans to deposit ratio of banks remained below the 80% minimum loan to deposit ratio target which indicated excess liquidity in the banking system remains and that more capacity for further lending by the banks exists.
On the outlook, 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, however it is expected to fall below the Reserve Bank’s inflation reference rate of 5% per annum in 2017/18.
The Acting 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 fakangāue lolotonga´, hili ia ‘enau fakataha na’e fakahoko ‘i he ‘aho 27 ‘o ‘Epeleli 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 fakangāue 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 le’ole’o ‘o e Pangikē Pule´, Jessie Cocker, na’e kake ‘a e ngaahi ngāue faka’ekonōmika fakalotofonua´ ‘i Fepueli hili ia ‘ene tupu māmālie ‘i he māhina kuo’osi´, ‘a ia ‘oku tatau pē eni mo e ngaahi ta’u kuo maliu atu´. Ko e kake ko ‘eni´ na’e tokoni’i ia he toe fakalakalaka ange ‘a e sekitoa ngoue´, hokohoko atu ai pē mo e ngaahi ngāue langa ‘oku lolotonga fakahoko´ pea pehē ki he tupu ‘a e sekitoa fefakatau’aki´.
Kaekehe, na’e ‘i ai foki ‘a e holo ‘i he pa’anga talifaki ‘i muli´ (foreign reserves) ‘o makatu’unga ia mei he fe’amokaki ‘i he tu’unga fakalūkufua ‘o e fe’ave’aki pa’anga ki muli´ (Overseas Exchange Transactions). ‘Oku fe’unga ‘a e tu’unga lolotonga ‘o e pa’anga talifaki´ pea mo e māhina ‘e 7.1 ‘o e koloa 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 hū mai mei muli´. Na’e tupu lahi ‘aupito ‘a e hikihiki ‘i he totongi koloa fakata’u´, ‘a ia na’e a’u ki he pēseti ‘e 8.9 ‘i Fepueli 2017. Na’e makatu’unga eni mei he tupu pēseti ‘e 10.5 ‘a e totongi ‘o e koloa hū mai, ‘o fakatupunga ia mei he ngaahi totongi tute fo’ou na’e kamata ‘i Siulai 2016. Na’e toe tupu foki mo e totongi koloa fakalotofonua´ ‘aki ‘a e pēseti ‘e 6.8 ‘o makatu’unga ia mei he si’isi’i ange ‘a e kava-Tonga´ pea pehē ki he lahi e feliliuaki e totongi ‘o e me’akai fakalotofonua´.
‘Oku kei ‘i he tu’unga lelei pē ‘a e fai fatongia ‘a e ngaahi pangikē fakakomēsiale´ pea toe mālohi ange ‘enau sino’i pa’anga tefito´, ‘o makatu’unga mei he fakafiemālie ‘a ‘enau ngaahi tupu´ (profitability) pea pehē ki hono kei mapule’i ai pē ‘a e ngaahi nō palopalema ‘i ha tu’unga ma’ulalo pē. Na’e fenāpasi ‘a e holo ‘a e pa’anga tipōsiti´ ‘i Fepueli pea mo e holo ‘i he pa’anga talifaki ‘i muli´ kae pehē ki he hulu ‘i he koloa fakalotofonua´. ‘Oku kei ma’ulalo pē ‘a e tu’unga ‘oku ‘i ai ‘a e ngaahi nō ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa’anga´, ‘i he tu’unga ma’ulalo taha kuo tu’utu’uni ‘e he Pangikē Pule´, ‘a ia ko e pēseti ‘e 80. ‘Oku hā mahino mai heni ‘a e kei toe lahi pē ‘a e pa’anga ngāue ‘a e ngaahi pangikē pea kei lahi pe mo e faingamālie ke toe fakalahi ‘a e ngaahi nō ‘oku tuku atu ‘e he ngaahi pangikē.
‘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 kuo tāketi ‘e he Pangikē Pulé ‘i he ta’u fakapa’anga 2017/18 ‘a ia ko e pēseti ‘e 5.
‘I he fakamā’opo’opo ‘a e Kōvana le’ole’o´ ‘oku ne pehē, ‘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 lolotonga ‘o ka fiema’u ki hono tauhi e sisitemi fakapa’anga ke malu mo lelei ‘o tokoni ki he tupu faka’ekonomika ‘a e fonua´.
