The National Reserve Bank of Tonga’s board of directors at its meeting on the 3rd October 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, stated that the activities in the domestic economy were mixed. Despite the decline in the agricultural exports decreased in July, stakeholders in the domestic agricultural market indicated that the supply during the month was relatively more favourable compared to June. Furthermore, the growth in lending to the agricultural sector continues to support the sector. The secondary sector continued to show positive activities with growth in both individual housing loans and business construction loans over the month supporting the construction sector. In the tertiary sector, international air arrivals declined by 3.0% followed by vehicle registrations with 21 vehicles (7.0%). Container registrations on the other hand, increased by 12.3% as a result of higher number business container registrations which rose by 297 containers reflecting a vibrant trade sector during the month and spill over effects to the transportation sector.
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) continued to fall over July to $278.4 million. This largely reflected the issuing of the new notes to the banks during the King’s birthday and other events in July which is also in line with the Reserve Bank’s initiative to improve the quality of the notes in circulation. The total loans to deposit ratio increased slightly from 75.4% last month to 76.3% in July reflecting the 0.6% growth in total loans outweighing the 0.5% growth in total deposits. Nevertheless, this ratio continued to remain below the 80% loan to deposit ratio target which indicates excess liquidity in the banking system remains. The weighted average interest rate spread narrowed slightly to 5.7%. This resulted from widening in the weighted average deposit rate outweighing the increase in the weighted average lending rate.
The foreign reserves rose by $1.1 million to $408.9 million in July 2017 due to a surplus in the overall overseas exchange transaction balance. This is equivalent to 7.4 months of import cover, which is still above the Reserve Bank’s minimum range of 3 – 4 months.
The annual headline inflation slowed to 7.1% in July 2017 from a high of 10.3% in the previous month, the highest level since September 2013. The decline over the month largely reflected the wind down of the hike in prices last year when the new excise tax became effective in July 2016. Imported prices rose by 7.4% over the year contributing 4.2 percentage points to the annual headline inflation. Similarly, the domestic annual inflation rate rose by 6.7% 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 in July 2016 and 2017, although it is expected to fall below the Reserve Bank’s inflation reference rate of 5% per annum in August 2017. 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´ hili ‘enau fakataha he ‘aho 3 ‘o ‘Okatopa 2017, ke kei hokohoko atu ai pē ‘a e ngaahi tu’utu’uni ngāue fakapa’anga lolotonga´ ‘a ia ‘oku hā atu ‘i lalo´. ‘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 Pule´, Sione Ngongo Kioa, na’e fetō’aki ‘a e ngaahi ngāue faka’ekonōmika fakalotofonua´. Neongo na’e holo ‘a hono uta atu e ngoue ki muli´, kā na’e pehē ‘e he kau ngoue fakalotofonua´ na’e lelei ange ‘a e fua ‘o e ngoue ‘i he lolotonga ‘o e māhina´ ‘i hono fakahoa ki he māhina ko Sune´. Na’e toe tokoni foki mo e lahi ange ‘a e nō ki he ngoue´ ki he tupu ‘i he sekitoa ngoue´. ‘Oku hokohoko atu ai pē ‘a e tupu ‘a e ngaahi ngāue ‘i he sekitoa ‘o e fakatupu koloa´ (secondary sector) ‘o hā mai ‘i he tupu ‘i he nō langa fale taautaha pea mo e nō langa ‘a e ngaahi pisinisi´ ‘i he lolotonga ‘o e māhina´. Ko e tupu ko ‘eni´ ‘oku tokoni ia ki he tupu ‘a e sekitoa langa´. ‘I he sekitoa ki he ngaahi ngāue´ (tertiary sector), na’e holo ‘a e tokolahi ‘o e tu’uta mai ki Tonga ni mei tu’apule’anga´ ‘aki ‘a e peseti ‘e 3.0. Na’e holo mo e lesisita ‘o e saliote misini na’e hū mai mei muli´ ‘aki ‘a e me’alele ‘e 21 (peseti ‘e 7.0). Kaekehe, na’e kake ‘a e lahi ‘o e ngaahi koniteina na’e lesisita´ ‘aki ‘a e peseti ‘e 12.3 ‘o makatu’unga mei he toe lahi ange ‘a e ngaahi koniteina ‘oku fakataumu’a ki he pisinisi´, ‘a ia ne tupu ‘aki ‘a e koniteina ‘e 297. ‘Oku hā mahino mei heni ‘a e longomo’ui ‘a e sekitoa fefakatau’aki (trade sector) ‘i he lolotonga ‘o e māhina´, kae’uma’ā ‘ene kaunga lelei ki he sekitoa fefononga’aki (transportation sector).
‘Oku kei ‘i he tu’unga lelei ‘aupito ‘a e fai fatongia ‘a e ngaahi pangikē fakakomēsiale´, ‘o makatu’unga mei he tu’unga fakafiemālie ‘a ‘enau tu’unga tupu´ (profitability) pea pehē ki he kei ‘i he tu’unga mā’ulalo ai pē ‘a e ngaahi nō ‘oku palopalema´. Na’e hokohoko atu ai pē ‘a e holo ‘a e pa’anga ngāue (liquidity) ‘a e ngaahi pangikē ki he $278.4 miliona ‘i Siulai. ‘Oku makatu’unga eni mei hono tufaki atu ‘a e ngaahi pa’anga fo’ou ki he ngaahi pangikē ‘i he lolotonga ‘a hono kātoanga’i ‘a e ‘aho ‘alo’i ‘o e Tama Tu’i´ pea mo e ngaahi kātoanga kehekehe pē na’e fakahoko ‘i Siulai. ‘Oku fenāpasi eni pea mo e ngāue ‘a e Pangikē Pule´ ke tuku atu ha ngaahi pa’anga nouti (notes) ‘oku ‘i ha tu’unga lelei. Na’e hiki si’i ‘a e lahi ‘o e ngaahi nō ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa’anga´ (loans/deposit ratio) mei he peseti ‘e 75.4 ‘i he māhina kuo’osi´ ki he peseti ‘e 76.3 ‘i Siulai. Na’e makatu’unga eni mei he tupu peseti ‘e 0.6 ‘a e ngaahi nō ‘o fakahoa ki he tupu peseti ‘e 0.5 ‘i he ngaahi fakahū pa’anga´. ‘Oku kei ma’ulalo pē ‘eni ‘i he tu’unga kuo tu’utu’uni ‘e he Pangikē Pule´ ke a’usia ‘e he ngaahi pangikē, ‘a ia ko e peseti ‘e 80. ‘Oku hā mahino mei heni ‘a e kei ‘i ai pē ‘a e 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 5.7, tupu mei he hiki hake ‘a e ‘avalisi ‘o e totongi tupu ‘i he fakahū pa’anga´ (weighted average deposit rate) ‘i hono fakahoa ki he tupu ‘i he ‘avalisi ‘o e totongi tupu ‘i he nō (weighted average lending rate).
Na’e hiki hake ‘a e pa’anga talifaki ‘i muli´ (foreign reserves) ‘aki ‘a e $1.1 miliona ki he $408.9 milliona ‘i Siulai 2017, makatu’unga mei he hulu ‘i he palanisi ‘o e fehū’aki pa’anga mo muli´. ‘Oku fe’unga ‘a e tu’unga lolotonga ‘o e pa’anga talifaki´ pea mo e māhina ‘e 7.4 ‘o e koloa mo e ngaahi ngāue hū mai mei muli´. ‘Oku kei ma’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 holo ‘a e hikihiki ‘i he totongi koloa fakata’u´ ki he peseti ‘e 7.1 ‘i Siulai. Ko e holo eni mei he tu’unga ma’olunga ko e peseti ‘e 10.3 ‘i he māhina kuo’osi´, ‘a ia ko e tu’unga ma’olunga ia kuo a’u ki ai talu mei Sepitema 2013. ‘Oku ha heni ‘a e kamata ke faka’osi’osi atu e hiki lahi ‘a e ngaahi totongi´ talu mei hono kamata ngaue’aki ‘o e ngaahi totongi tute fo’ou ne fakahoko ‘i Siulai 2016. Na’e hiki hake ‘a e totongi ‘o e ngaahi koloa hū mai mei muli´ ‘i he faka’osinga ‘o e ta’u´ ‘aki ‘a e peseti ‘e 7.4, ‘o tokoni peseti ‘e 4.2 ki he hikihiki ‘i he totongi koloa fakata’u´. Na’e hiki hake foki mo e totongi koloa fakata’u fakalotofonua´ ‘aki ‘a e peseti ‘e 6.7 makatu’unga mei he lahi e fetō’aki ‘i he totongi ‘o e koloa me’akai fakalotofonua´, hiki e totongi ‘o e ‘uhila´, pea mo e si’isi’i ange ‘a e lahi ‘o e kava-Tonga´.
‘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 mo Siulai 2017, pea ke toki holo ki he tu’unga fe’unga ko e pēseti ‘e 5 ‘i he fakafuofua ‘a e Pangikē Pulé (reference rate) ‘i ‘Aokosi 2017. Ka neongo ia ‘oku malava ke uesia ‘a e ngaahi fakafuofua ko ’eni mei he feliliuaki ‘o e ‘ea΄, 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.
