The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 5th of August 2020, 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 May 2020 reflected slower than usual economic conditions as the month of May is normally a festive time with White Sunday, Mother’s Day, and Father’s Day. The local restrictions and closed international borders continue to keep economic activities at a minimum. The tertiary sector show negative growth yet again with no arrivals and weak consumption demand. However, indicators within the primary and secondary sectors indicate some growth with rising agricultural exports and increasing lending for construction.
The total banking system still indicate soundness supported by strong capital and adequate profits. The banks’ total loans to deposit ratio declined from 81.3% to 80.5% over the month, reflecting a higher increase in deposits compared to that of loans. This is slightly above the 80% minimum loan to deposit ratio. Nonetheless, the liquidity in the banking system remains relatively high, indicating that existing capacity is still available for further lending. The weighted average interest rate spread narrowed both over the month and year to May 2020 by 13.57 basis points and 39.30 basis points respectively to 5.70%.
The official foreign reserves recovered by $14.5 million over the month and by $21.3 million in the year to May 2020. The increase was mainly due to receipts of official funds as assistance for TC Harold and preparations for COVID-19.
Inflation fell by 0.4% over the month as imported prices declined by 1.2% outweighing the 0.7% increase in local prices. Annual inflation for May 2020 was 0.1% which is lower than the 1.6% in May 2019 and slightly below 1.3% in April 2020. Imported prices increased due to higher food prices whilst domestic prices declined in the year mainly resulting from the lower Kava Tonga prices.
The Reserve Bank’s projection for Tonga’s economy to contract in the current fiscal year remains, due to the negative impacts of COVID-19. However, the foreign reserves is still expected to remain at sufficient levels above the 3 months minimum threshold of import cover. Inflation is also expected to gradually increase yet remain below the 5% reference rate. The banking system is still sound supported by high liquidity. 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´ hili ‘enau fakataha ‘i he ‘aho 5 ‘o ‘Aokosi 2020, 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 pangikē, ke nō atu ki he ngaahi sekitoa fakatupu´ pea mo tokoni’i e ‘ekonōmika ‘a e fonua´ mei he ngaahi uesia ‘o e COIVD-19.
- Ke hoko atu pē hono ta’etotongi ‘a e tupu (interest) ‘i he ngaahi ‘akauni pa‘anga ngāue ‘a e ngaahi pangikē´ (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 pangikē ‘o fakahoa ki he lahi ‘o ‘enau ngaahi fakahū pa‘anga´ (loans/deposit ratio).
- Ke tu’uma’u pē ‘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) ‘i he peseti ‘e 10.
- 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 he peseti ‘e 5.
- Muimui’i ofi ‘a e lahi ‘o e pa’anga ngāue ‘a e ngaahi pangikē, pea holoki 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 pangikē 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´.
Na‘e fakahā ‘e he Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, na’e ‘ikai ke longomo’ui ‘a e ngaahi ngāue faka’ekonōmika´ ‘i he māhina ó Mē 2020 hangē ko ia ‘oku fa’a angamaheni ‘aki he ngaahi ta’u kimu’a´ ‘i hono faka’ilonga’i ‘a e ngaahi Sāpate Fakamē, Sāpate Faée, mo e Sāpate Tamai´. Óku makatu’unga pē foki ‘a e si’isi’i ange ‘a e ngaahi ngāue faka’ekonōmika´ mei he ngaahi fakataputapui fakalotofonua fekau’aki mo e COVID-19, pehē ki hono tāpuni á e kau’āfonua mei he fefolau’aki´. Í he éne pehē, ’oku kei holo pē á e tupu ‘i he sekitoa ó e ngaahi ngāue´ koe’uhi´ kuo íkai ke toe ‘i ai ha pāsese tūúta mai, pea holo mo e ngaahi fiemaú taautaha´. Kaekehe, naé kake hake á e ngaahi ngāue í he tafa'aki ki he ngoue´, vaotātā mo e toutai´ makatuúnga mei he lahi ange á e ngoue na’e uta atu ki muli´, mo e tupu á e ngaahi nō langa´.
Óku kei malu pē ‘a e fai fatongia ‘a e ngaahi pangikē, ‘o poupou ki ai ‘a e mālohi ‘o ‘enau pa‘anga tefito´, pehē ki he‘enau ngaahi tupu´ (profits). Na‘e holo ‘a e lahi ‘o e ngaahi fakahū pa‘anga´ ne tuku atu´ ‘i hono fakahoa ki he lahi ‘o e ngaahi nō (loans/deposit ratio), mei he peseti ‘e 81.3 ki he peseti ‘e 80.5 í he māhina´ ni, makatuúnga mei he lahi ange á e tupu e ngaahi fakahū pa‘anga´ í he tupu ‘o e ngaahi nō. ‘Oku kei mā’olunga si’i pē eni ‘i he peseti ‘e 80 kuo tu‘utu‘uni ‘e he Pangikē Pule´. Kaekehe, ‘oku kei lahi pē ‘a e hulu ‘i he pa’anga ngāue (liquidity) ‘a e ngaahi pangikē, ‘a ia ‘oku malava ke hokohoko atu pē ‘a hono nō atu ki tu’a´. Na‘e holo ‘a e ‘avalisi ‘a e totongi tupu ‘i he nō mo e fakahū pa’anga´ (weighted average interest rate spread) ‘i he māhina´ ó Mē 2020 ‘aki ‘a e poini peseti ‘e 13.57, pea ‘i he ta’u´ ‘aki ‘a e poini peseti ‘e 39.30 ki he peseti ‘e 5.70.
Na‘e tupu ‘a e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ‘i he māhina´ ‘aki ‘a e $14.5 miliona, pea ‘i he ta’u ki Mē 2020 ‘aki ‘a e $21.3 miliona. Na’e makatu’unga ‘a e tupu ko eni mei´ he hū mai ‘a e ngaahi tokoni fakapa’anga ki he TC Haloti mo e tokateu ki he COVID-19.
Na’e holo ‘a e tu’unga ‘o e totongi koloa fakalūkufua΄ í he māhina ‘aki ‘a e peseti ‘e 0.4, makatu’unga mei he holo ‘a e ngaahi totongi koloa hū mai mei muli΄ ‘aki ‘a e peseti ‘e 1.2 ó lahi ange í he tupu ‘a e ngaahi totongi koloa fakalotofonua΄ ‘aki ‘a e peseti ‘e 0.7. ‘I he ta’u΄ ki Mē 2020, na’e hiki ‘a e tu’unga ‘o e totongi koloa fakalūkufua΄ ’aki ‘a e peseti ‘e 0.1, ‘a ia ‘oku ma’ulalo ange ia ‘i he tupu peseti ‘e 1.6 ‘i Mē 2019, mo e tupu peseti ‘e 1.3 ‘i ‘Epeleli 2020. Naé hiki á e totongi ó e ngaahi koloa hū mai mei muli΄, ‘o makatuúnga mei he hiki á e totongi ki he koloa me’akai΄ kae kei holo pē ‘a e ngaahi totongi koloa fakalotofonua΄ ‘i he ta’u΄ tupu mei he holo ‘a e totongi ‘o e Kava Tonga΄.
‘Oku ‘amanaki foki ‘e uesia ‘a e ’ekonōmikaˊ tupu mei he mafola fakamāmani lahi ‘a e COVID-19, ‘a ia ‘e malava ke holo ai ‘a e tupu faka’ekonōmika ‘a e fonuaˊ ‘i he ta’u fakapa’anga lolotongaˊ. Ka neongo ia, ‘oku fakafuofua ‘e ‘i he tu’unga fakafiemālie pē ‘a e pa‘anga talifaki ‘i mulí´ ‘o lahi ange ‘i he māhina ‘e 3 ‘o e koloa hū maiˊ. ‘Oku fakafuofua ‘e hiki hake mo e ngaahi totongi koloaˊ kā ‘e kei ma’ulalo pē ‘i he peseti ‘e 5. Ko e ngaahi pangikē ‘oku ‘i he tu’unga fakafiemālie 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΄.
