The Reserve Bank maintained its monetary policy stance which supported the monetary policy objectives of maintaining internal and external monetary stability, promoting financial stability and a sound and efficient financial system and conducting its activities in a manner that supports macroeconomic stability and economic growth.

The Reserve Bank’s outlook for a robust domestic economic growth remains for 2016/17 at 3.7%, an upward revision from the estimated 3.6% growth released in the August 2016 MPS. This followed a stronger growth of 3.7% and 3.4% for 2014/15 and 2015/16 respectively, as indicated by the Statistics Department’s official estimate. The projected growth for 2016/17 was mainly driven by anticipated stronger growths in construction, utilities, fisheries and mining & quarry. Moreover, the number of events scheduled for 2016/17 supported the growth in tourism and trade sectors. Higher real GDP growth of 4.8% is projected by the Reserve Bank for 2017/18, an upward revision from the August 2016 MPS estimate of 4.7%. This growth is expected to be driven by construction, as Government continues the construction of sports facilities. Additionally, the financial intermediation, transport & communication, trade, fishing and tourism sectors are also expected to contribute to the anticipated growth.

Inflationary pressures continued to rise in February 2017. The annual headline inflation rate increased significantly by 8.9% in February 2017 compared to a 5.1% rise in August 2016, and remained above the Reserve Bank’s reference rate of 5% per annum. The Reserve Bank expects the upward inflationary pressure to remain in the near term due to the impact of the increased custom duty and excise tax effective in July 2016. However, the annual headline inflation is forecasted to gradually decline below the reference rate of 5% per annum after August 2017.

The overall balance of Overseas Exchange Transactions (OET) over the past six months to February 2017 was a surplus of $11.4 million, contributed to an increase in the gross official foreign reserves to $377.7 million in February 2017, compared to $366.3 million in August 2016. This was sufficient to cover imports of merchandise goods and services for 7.1 months1, well above the Reserve Bank’s minimum range of 3-4 months of imports. The level of foreign reserves is expected to remain at comfortable levels supported by expected higher receipts of remittances, higher export receipts, anticipated government receipt of budget support and grant funds from development partners and this will be partially offset by the projected rise in import payments.

Tonga’s financial system remained sound over the 6 months to February 2017 as the banking system maintained strong capital and liquidity position, supported by comfortable profitability, and non-performing loans continuing to remain low. Broad money and banking system liquidity continued to rise as total banks’ lending increased to a new level in February 2017 and deposits also rose over the 6 months to February 2017. Total loans to deposits ratios slightly fell in February 2017 to 73.3% from 73.7% in August 2016. 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. Despite the strong growth in the banks’ loan books, this was outweighed by the continuous growth in deposits, which coincided with the higher foreign reserves.

Net credit to Government declined over the six months to February 2017 and anticipated to decline in the near term, as a result of expected Government budgetary support and grants receipts. The Reserve Bank will closely monitor the implication of the fiscal policy measures on the monetary policy objectives.

Given the recent developments and the outlook on the monetary policy targets, the current monetary policy stance is considered appropriate in the medium term. Therefore, the Reserve Bank will continue to adopt measures to encourage the utilisation of the excess liquidity in the banking system to increase lending in order to support domestic economic growth, and strengthen the monetary policy transmission mechanism in the medium term. The Reserve Bank will remain vigilant and continue to closely monitor early signs of vulnerability, 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.

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Fakamatala Fokotu’utu’u ngāue fakapa’anga ki Fepueli 2017

Na’e tali ‘e he Poate ‘a e kau Talēkita ‘a e Pangikē Pule Fakafonua ‘o Tonga´ ‘i he ‘enau fakataha na’e fakahoko ‘i he ‘aho 31 ‘o Siulai 2017, ke tuku atu ‘e he Pangikē Pule Fakafonua ‘a Tonga΄ ‘a e Fakamatala Fokotu’utu’u Ngāue Fakapa’anga ki Fepueli 2017. Ko e fakamatala ko ’eni΄ ‘oku hā atu ai ‘a e vakai ki he ngaahi fakalakalaka faka’ekonōmika ‘i Tonga ni΄ mo e founga ngāue ‘a e Pangikē Pule΄ ‘i he māhina ‘e ono ki Fepueli 2017. ‘Oku toe tuku atu ‘e he Fakamatala ko ’eni΄ ‘a e fakafuofua ‘a e Pangikē Pule΄ ki he kaha’u΄.

‘Oku kei hokohoko atu ai pē ‘a e ngaahi fokotu’utu’u ngāue fakapa’anga lolotonga ‘a e Pangikē Pule΄ ke faka’ai’ai mo pāotoloaki ‘a e ngaahi ngāue faka’ekonōmika ‘a e fonuá. ‘Oku taumu’a ‘a e ngaahi tefito’i tu’utu’uni fakapa’anga΄ ni ke siofi mo muimui’i ofi e ngaahi fakalakalaka faka’ekonōmika fakalotofonuá mo tu’apule’angá, tokangaekina e ngaahi fokotu’utu’u ngāue fakapa’angá ke pukepuke e ma’uma’uluta ‘a e tu’unga fakapa’angá pea mo langa hake ha sisitemi fakapa’anga ‘oku malu mo lelei.

‘Oku kei tu’uma’u pe ‘a e fakafuofua ‘a e Pangikē Pule ‘e mālohi ‘a e tupu faka’ekonomika fakalotofonua΄ ‘aki ‘a e peseti ‘e 3.7 ‘i he ta’u fakapa’anga 2016/17, ko e hiki hake ‘eni mei he fakafuofua ki he tupu peseti ‘e 3.6 na’e tuku atu ‘i he Fakamatala Fokotu’utu’u Fakapa’anga ‘o ‘Aokosi 2016. Ko e fakafuofua ‘eni ‘a e Pangikē Pule΄ hili ko ia hono tuku mai ‘e he Potungāue Sitetisitika ‘a e ngaahi fika faka’ofisiale ki he tupu faka’ekonomika ‘a e fonua΄, ‘a ia ko e peseti ‘e 3.7 ‘i he 2014/15 pea peseti ‘e 3.4 ‘a e 2015/16. ‘Oku fakafuofua ko e tupu faka’ekonomika ki he 2016/17 ‘e fakatefito ia mei he sekitoa langa΄, ngaahi fiema’u faka’api΄, toutai΄, pea mo e keli’anga koloa mo e maka΄. ‘Oku kau ki heni ‘a e sekitoa takimamata΄ mo e fefakatau’aki΄ ‘a ia ne tokoni ki ai ‘a e ngaahi kātoanga ne fakahoko lolotonga ‘a e ta’u fakapa’anga΄. Na’e toe hiki mo e fakafuofua ki he tupu faka’ekonomika fakalotofonua΄ ‘o e 2017/18 ki he peseti ‘e 4.8 mei he peseti ‘e 4.7 ‘i he fakafuofua ne tuku atu ‘i he Fakamatala Fokotu’utu’u Fakapa’anga ‘o ‘Aokosi 2016. ‘Oku fakatefito ‘a e tupu ko ’eni΄ mei he fakafuofua ‘e tupu ‘a e ngaahi ngāue langa´ koe’uhi΄ ko e ngaahi langa ‘oku ‘amanaki ke fakahoko ki he ngaahi fale fai’anga sipoti΄. ‘E poupou atu mo e ngaahi sekitoa kehekehe pē ‘o kau ki ai ‘a e sekitoa ki he ngāue fakapa’anga΄, fefononga’aki mo e fetu’utaki΄, fefakatau’aki΄, toutai΄, pea mo e takimamata΄.

Na’e hokohoko ai pē ‘a e hikihiki ‘i he totongi koloa fakata’u΄ ‘i Fepueli 2017, ‘o hiki ‘aki ‘a e peseti ‘e 8.9 ‘i he faka’osinga ‘o e ta’u΄ ki Fepueli 2017 fakahoa ia ki he hiki peseti ‘e 5.1 ‘i ‘Aokosi 2016, ‘a ia ‘oku ma’olunga ange ‘eni ‘i he tu’unga fe’unga ko e peseti ‘e 5 (reference rate) ‘oku faka’amu ‘a e Pangikē Pule΄ ke tauhi ai ‘a e hikihiki e totongi ‘o e ngaahi koloa΄. ‘Oku toe fakafuofua ‘e kei hokohoko atu ai pē ‘a e hikihiki ‘i he totongi koloá ‘i he kaha’u vave mai΄, ‘o makatu’unga mei he ngaahi totongi tute ne fakahoko ‘i Siulai 2016, pea ke toki holo ki he tu’unga fe’unga (reference rate) ‘a ia ko e pēseti ‘e 5 ‘i ‘Aokosi 2017.

Na’e tokoni ‘a e hulu $11.4 miliona ko ia ‘i he palanisi fakalūkufua ‘o e fehū'aki pa'anga mo muli ‘i he māhina ‘e 6 ki Fepueli 2017 ki he hiki hake ‘i he tu’unga ‘o e pa’anga talifaki ‘a e pule’anga΄ ‘i muli΄ ki he $377.7 miliona ‘i Fepueli 2017, ‘o fakahoa ia ki he $366.3 miliona ‘i ‘Aokosi 2016. Na’e fe’unga ‘a e tu’unga ‘o e pa’anga talifaki΄ pea mo e māhina ‘e 7.1 ‘o e koloa mo e ngaahi ngāue hū mai mei muli΄, ‘a ia ‘oku kei ma’olunga ‘aupito pē ‘eni ‘i he tu’unga fe’unga ‘oku fiema’u ‘e he Pangikē Pulé, ko e māhina ‘e 3 ki he 4 ‘o e koloa mo e ngaahi ngāue hū mai mei muli΄. ‘Oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie ai pē ‘a e pa’anga talifaki ‘i muli ‘a e pule’anga΄ makatu’unga mei he fakafuofua ‘e toe lahiange ‘a e līpa’anga mai mei muli΄, pa’anga hū mai mei he uta koloa ki muli΄, ngaahi pa’anga tokoni fakapatiseti moe tokoni ki he Pule’anga΄ mei he ngaahi hoa ngāue fakalakalaka ‘a e fonua΄, neongo ‘oku fakafuofua ‘e toe hiki hake mo e lahi ‘o e hū koloa mai mei muli΄.

‘I he māhina ‘e 6 ki Fepueli 2017, na’e ‘i he tu’unga fakafiemālie pē ‘a e ngaahi pangikē. Ne kei ‘i he tu’unga lelei pe ‘a e sino’i pa’anga tefito (capital) ‘a e ngaahi pangikē, makatu’unga mei he tu’unga ma’olunga ‘a e tupu fakapa’anga΄ (profitability), pea mo e kei ma’ulalo ‘a e ngaahi nō palopalema΄. Na’e toe ‘alu hake ‘a e pa’anga fakalukufua ‘a e fonua΄ (broad money) pea mo e pa’anga ngāue (liquidity) ‘a e ngaahi pangikē makatu’unga mei he lahi ange ‘a e fakahū pa’anga ki he ngaahi pangikē pea mo e a’u ‘a e ngaahi nō kuo tuku atu ‘e he ngaahi pangikē ki ha tu’unga ma’olunga ‘i he māhina ‘e 6 ki Fepueli 2017. Na’e holo si’i ‘a e lahi ‘o e ngaahi nō ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa’angá (loan/deposit ratio) mei he peseti ‘e 73.7 ‘i ‘Aokosi 2016 ki he peseti ‘e 73.3 ‘i Fepueli 2017, ‘a ia ‘oku kei ma’ulalo pē ‘i he pēseti ‘e 80 kuo tu’utu’uni ‘e he Pangike Pule´ ke a’usia ‘e he ngaahi pangike´. ‘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. Neongo ‘a e toe lahi ange ‘a e ngaahi nō ne tuku atu ‘e he ngaahi pangikē, na’e kei lahi ange pe ‘a e fakahū pa’anga΄ ‘o tatau ia mo e lahi ange ‘a e pa’anga talifaki ‘a e Pule’anga΄ ‘i muli΄.

Na’e holo ‘a e lahi e pa’anga ‘e totongi fakafoki ‘e he ngaahi pangiké ki he Pule’angá ‘i he mahina ‘e 6 ki Fepueli 2017 pea ‘oku fakafuofua ke holo ai pē ‘i he kaha’u vave mai΄, makatu’unga mei he ngaahi pa’anga tokoni fakapatiseti mo e tokoni ki he Pule’anga΄ ‘oku ‘amanaki ‘e hū mai΄. ‘E kei hokohoko atu ai pe ‘a hono siofi ‘e he Pangikē Pule΄ ‘a e ngaahi fokotu’utu’u ngāue ‘a e Pule’anga΄ mo ‘ene felāve’i mo e ngaahi taumu’a ngāue ‘o e fokotu’utu’u ngāue fakapa’angá.

Koe’uhi΄ ko e fakafiemālie ‘a e ngaahi fakalakalaka ki mui ni΄ mo e fakafuofua ki he kaha’u΄, ‘e kei hokohoko atu ai pē ‘a e ngaahi fokotu’utu’u fakapa’anga lolotonga ‘a e Pangikē Pule´ ki he kaha’u vave mai΄. Ko ia ai, ‘e hoko atu ‘a e Pangikē Pule´ ke fahoko ‘a e ngaahi tu’utu’uni ngāue fakapa’anga lolotonga΄ ke faka’ai’ai ‘aki mo pātoloaki ‘a e ngaahi ngāue faka’ekonōmika ‘a e fonua´. ‘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 ke tokoni ki he ma’uma’uluta mo e tupu faka’ekonōmika ‘a e fonua΄.