The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 1st of March 2021, approved to maintain its current monetary policy measures outlined below. This is to encourage utilization of the excess liquidity in the banking system, through further lending to growth sectors and to support the economy from the impacts of COVID-19.
- 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%.
- Maintain the inflation reference rate at 5%.
- Monitor the commercial banks' liquidity and adjust the SRD ratio if needed.
- Monitoring the commercial banks’ capital reserves and adjust further when required.
- Ease the exchange control requirements when required.
- Continue to issue Government Bonds.
- Maintain clear channels of effective communications with the financial institutions for adequate preparedness.
- Continue to be transparent and raise awareness of its monetary policy decisions through press releases to the public.
- Closely monitor the impacts of the pandemic in the financial system for early detection of any signs of vulnerability.
- Continue to ensure both commercial banks and non-bank financial institutions adheres to all Government declarations regarding COVID-19 in the workplace while delivering essential financial services to the public.
The Governor of the Reserve Bank, Sione Ngongo Kioa, reported that there are mixed performances in domestic activities for December 2020. However, looking at the overall performance for year 2020, sectoral outputs, consumptions activities and investment are contracting. This owes largely to the extended border lockdowns and disruptions from COVID-19 severely impacting the tourism sector and weakens aggregate demand. While great uncertainties still remain on the outlook, there is some positive uptake on the recovery of the global economy and the vaccination outturn.
Annual headline inflation has returned to a positive growth of 0.3% in December 2020 after dipping into negative territory since June 2020. The rebound stems from an increase in import prices of food, tobacco and alcoholic beverages. This more than offset a decline in domestic prices due to lower prices or electricity, gas and other fuels. While inflation is expected to gradually pick up, it is estimated to be below the NRBT’s reference rate of 5%.
Official foreign reserves continue to rise strongly in December 2020 to $675.6 million, equivalent to 11.5 months of imports, well above the 3 months minimum threshold. This attributes to the generous inflow of budget support and official grants from development partners to assist Tonga’s recovery from COVID-19 and recent cyclones. Additionally, remittance receipts continue to hold up further supporting foreign reserves.
The total banking system remains stable supported by strong capital and liquidity positions. However, lending contracted by 1.1% in the year to December 2020, resulting in the decline in loans to deposit ratio to 68.6%, which is below the 80% minimum. This reflects the weak investment appetite in the market, and banks becoming more risk averse. Nevertheless, the prolonged contraction in the economy puts pressure in the financial system with regards to loan repayments and non-performing loans. The Banking Supervision unit is closely monitoring these emerging risks to ensure that financial stability is maintained. The weighted average interest rate spread also narrowed over the year to 5.7% owing mostly to lower weighted average lending rates.
On the latest review of the Reserve Bank’s GDP forecast, the expected downturn for 2019/20 and 2020/21 still remains, with a worsening outturn for 2020/21 than previously expected. The economy is expected to start recovering by 2021/22. The outlook for foreign reserves is still expected to be well above the 3 months minimum threshold of import cover, while inflation is also expected to remain below the 5% reference rate. The banking system is expected to remain stable supported by high liquidity and capital. Meanwhile, the Reserve Bank continues to be vigilant in closely monitoring its economic and financial indicators and stands ready to adjust its monetary policy settings if needed to maintain internal and external stability and support macroeconomic growth.
Tu‘utu‘uni ki he Fokotu‘utu‘u Ngāue Fakapa‘anga
Na‘e tali ‘e he Poate ‘a e kau Talēkita ‘o e Pangikē Pule Fakafonua ‘o Tonga´ í he ‘enau fakataha ‘i he ‘aho 1 ‘o Ma’asi 2021, ke kei hoko atu pē ‘a e ngaahi tu‘utu‘uni ngāue fakapa‘anga lolotonga´ ‘a ia ‘oku hā atu ‘i lalo´. ‘Oku fakataumu‘a eni ke ngāue’aki ‘a e hulu ‘i he pa‘anga ngāue ‘a e ngaahi pangikee´, ke nō atu ki he ngaahi sekitoa fakatupu´ pea mo tokoni’i e ‘ekonōmika ‘a e fonua´ mei he ngaahi uesia ‘o e COVID-19.
- Ke hoko atu pē hono ta’etotongi ‘a e tupu (interest) ‘i he ngaahi ‘akauni pa‘anga ngāue ‘a e ngaahi pangikee´ (Exchange Settlement Account) ‘oku fakahū ‘i he Pangikē Pule´ (zero interest rate policy).
- Ke ‘oua ‘e toe ma‘ulalo hifo ‘i he peseti ‘e 80 ‘a e lahi e ngaahi nō ‘oku tuku atu ‘e he ngaahi pangikee´ ‘o fakahoa ki he lahi ‘o ‘enau ngaahi fakahū pa‘anga´ (loans/deposit ratio).
- Ke tu’uma’u ‘i he peseti ‘e 10 ‘a e lahi ‘o e pa‘anga ‘a e ngaahi pangikē fakakomēsiale´, ‘a ia ‘oku tu‘utu‘uni fakalao ke tauhi ‘i he Pangikē Pule´ (Statutory Reserve Deposit).
- Ke tauhi pē ‘a e tu‘unga ‘o e hikihiki ‘i he totongi ‘o e ngaahi koloa´ (inflation reference rate) ke ‘oua na’a laka hake í he peseti ‘e 5.
- Muimui’i ofi ‘a e lahi ‘o e pa’anga ngāue ‘a e ngaahi pangikee´, pea liliu e peseti ‘oku tu’utu’uni fakalao ke tauhi ‘i he Pangikē Pule´ (SRD) ‘oka fiema’u.
- Vakai’i ‘a e tu’unga ‘oku ‘i ai ‘a e pa’anga tefito ‘a e ngaahi pangikee´ ke fe’unga, pea liliu ‘a e tu’utu’uni lolotonga´ ‘i ha taimi ‘e fiema’u ai.
- Fakafaingofua’i ‘a e ngaahi tu’utu’uni fekau’aki mo e fetongi pa’anga muli´ ’i ha taimi ‘e fiema’u ai.
- Hokohoko atu pē ‘a e founga lolotonga ki hono fakatau ‘a e ngaahi pōnite ‘a e Pule’anga´.
- Tauhi ‘a e fetu’utaki vāofi mo e ngaahi kautaha fakapa’anga´ ke fakapapau’i ‘oku nau ‘i ha tu’unga mateuteu fe’unga.
- Hoko atu pē hono faka’ata kitu’a ‘a e ngaahi tu’utu’uni ngāue ‘a e Pangikē Pule´ ‘aki hono fakahā atu ‘i he ngaahi fanongonongo tuku atu ki he kakai ‘o e fonua´.
- Muimui’i ofi ‘a e ngaahi uesia ‘o e mafola fakamāmani lahi ‘a e COVID-19 ‘i he ngaahi ngāue fakapa’anga´ telia ha ngaahi faka’ilonga ‘o ha tu’ulaveangofua.
- Fakapapau’i ‘oku hokohoko atu pē ‘a e talangofua ‘a e ngaahi pangikē´ mo e ngaahi kautaha fakapa’anga ‘oku ‘ikai ko ha pangikē ki he ngaahi tu’utu’uni Fakapule’anga fekau’aki mo e COVID-19, pea ‘i he taimi tatau ‘oku kei fakahoko pe ‘a e ngaahi ngāue fakapa’anga´ ki he kakai ‘o e fonua´.
‘I he lipooti ‘a e Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, na’e fetō’aki ‘a e ola ‘o e ngaahi ngāue faka’ekonōmika fakalotofonua´ ‘i Tisema 2020. Kaekehe, ‘i he vakai ki he ola fakalūkufua ‘o e ta’u 2020, na’e holo ‘a e ola e ngāue ‘i he ngaahi sekitoa΄, holo ‘a e fakatau΄ mo e ngaue’aki ‘o e koloa΄ (consumption), pea pehē foki ki he ngaahi invesimeni΄ (investment). Ne makatu‘unga ‘eni mei he ngaahi uesia ‘a e COVID-19 pea mo hono fakalōlōa ‘a hono tāpuni ‘o e kau‘āfonua΄, ‘o uesia lahi ai ‘a e sekitoa takimamata΄ mo vaivai ange á e ngaahi fiema’u fakalūkufua΄ (aggregate demand). Neongo ‘oku kei ta’epau ‘a e fakafuofua ki he kaha’u΄, ‘oku ‘i ai pē ‘a e ‘amanaki ki ha fakaakeake ‘a e tu’unga faka’ekonōmika fakamāmāni lahi΄ pea mo ha ola lelei ‘o e ngaahi fokotu’utu’u ki he huhu malu’i ‘o e COVID-19.
Na’e tupu peseti ‘e 0.3 ‘a e hikihiki fakata’u ‘o e totongi koloa΄ ‘i Tisema 2020 hili ia ‘a ‘ene holo talu mei Sune 2020. Ko e hiki hake ko‘eni΄ ne makatu’unga mei he ngaahi totongi koloa hū mai mei muli΄ ‘o hangē ko e me’akai΄, tapaka΄, pea mo e kava malohi΄. Ne lahi ange ia ‘i hono fakahoa ki he holo ‘a e ngaahi totongi fakalotofonua΄, tupu mei he holo ‘a e totongi ‘uhila΄, totongi kasa΄ mo e ngaahi koloa lolo kehe΄. Neongo ‘oku fakafuofua ‘e hokohoko atu ‘a e hikihiki ‘i he totongi koloa fakalūkufua΄, kā ‘e kei ma’ulalo pe ia ‘i he tu’unga fe’unga ko e peseti ‘e 5.
Na’e kei tupu mālohi pe ‘a e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ki he $675.6 miliona ‘i Tisema 2020, ‘o fe’unga ia mo e māhina ‘e 11.5 ‘o e ngaahi koloa mo e ngāue hū mai mei muli´, ‘o kei ma’olunga pē ‘i he tu’unga fe’unga ko e māhina ‘e 3. Na’e makatu’unga ‘a e tupu lahi ko eni´ mei he lahi ange ‘a e ngaahi tokoni fakapa’anga ki he patiseti ‘a e Pule’anga´, pa’anga ki he ngaahi polōseki langa fakalakalaka´, ke tokoni’i ‘a Tonga ‘i he’ene fakaakeake mei he COVID-19 pea mo e ngaahi saikolone ‘i he kuohili΄. Ne toe tokoni foki ‘a e talafi pa’anga taautaha mai mei muli´ ki he tupu ‘a e pa’anga talifaki ‘i muli΄.
‘Oku kei malu pē ‘a e fai fatongia ‘a e ngaahi pangikee´, ‘o poupou ki ai ‘a e mālohi ‘o ‘enau pa‘anga tefito´ (capital), pehē ki he‘enau pa’anga ngāue´ (liquidity). Kaekehe, ‘i he ta’u ki Tisema 2020, na’e holo ‘a e ngaahi nō ne tuku atu΄ ‘aki ‘a e peseti ‘e 1.1 pea makatu’unga mei ai ‘a e holo e lahi ‘o e ngaahi fakahū pa‘anga´ ‘i hono fakahoa ki he lahi ‘o e ngaahi nō (loans/deposit ratio) ki he peseti ‘e 68.6, ó kei ma‘ulalo pē ‘i he tu’unga ma’ulalo taha ‘oku tu’utu’uni’i´ ‘a ia ko e peseti ‘e 80. ‘Oku ho’ata mei ai ‘a e si’isi’i ange e fiema’u ‘inivesi΄, pea mo e toe tokanga ange ‘a e ngaahi pangikee ki ha ngaahi uesia ‘e malava ke hoko. Ka neongo ia, ko e lōloa ange ‘a e holo e tu’unga faka’ekonōmika´ ‘e malava ke uesia ai ‘a e tafa’aki fakapa’anga´, ‘o tautefito ki he totongi fakafoki ‘o e ngaahi nō, pea mo e ngaahi nō palopalema´. Ko ia ai, ‘oku muimui’i ofi ‘e he tafa’aki ‘oku na’u tokanga’i ‘a e ngaahi pangikee ‘a e ngaahi uesia é malava ke hoko΄ (risk) ke fakapapau’i ‘oku malu pē ‘a e tafa’aki fakapa’anga΄. Ko e ‘avalisi ‘o e totongi tupu ‘i he nō mo e fakahū pa’anga´ (weighted average interest rate spread) na’e holo ‘i he ta’u´ ki he peseti ‘e 5.7 makatu’unga mei he holo ‘a e totongi tupu ‘i he ngaahi nō (lending rates).
‘I he vakai fakamuimui ‘a e Pangikē Pule΄ ki he tupu faka’ekonōmika fakalotofonua΄, ‘oku kei tu’uma’u pē ‘a e fakafuofua ‘e holo ‘a e tupu faka’ekonōmika΄ ‘i he 2019/20 pea mo e 2020/21, kā ‘e toe holo lahi ange ‘a e 2020/21 mei he fakafuofua kuo’osi΄. ‘Oku fakafuofua ke toki kamata e fakaakeake ‘a e tu’unga faka’ekonōmika΄ ‘i he 2021/22. ‘Oku kei ‘amanaki pē ‘e fakafiemālie pē ‘a e tu’unga ó e pa‘anga talifaki ‘i mulí´ ‘o lahi ange ‘i he māhina ‘e 3 ‘o e koloa mo e ngāue hū maiˊ, pea kei ma’ulalo pē ‘a e hikihiki ‘o e totongi koloa fakalūkufua´ i he peseti ‘e 5. Ko e ngaahi pangikē ‘oku kei malu pē mo ‘enau ngaahi ngāue΄, pea kei hulu pē mo ‘enau pa’anga ngāue΄. ‘Oku mātu’aki tokanga ‘a e Pangikē Pule´ ki hono muimui‘i ofi ‘a e ola ‘o e ngaahi ngāue faka‘ekonōmika΄ mo fakapa’anga΄, pea mateuteu ke liliu ‘a e ngaahi fokotu‘utu‘u ngāue fakapa‘anga lolotonga´ ‘o ka fiema‘u ke pukepuke ‘aki ‘a e ma’uma’uluta fakalotofonua΄ mo fakatu’apule’anga΄, pea ke tokoni foki ki he tupu faka‘ekonōmika fakalūkufua΄.
