The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 6th of November 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.

  1. maintain the monetary policy rate at 0% (zero interest rate policy);
  2. maintain the minimum loans/deposit ratio of 80%;
  3. maintain the Statutory Reserve Deposit ratio at 10%;
  4. maintain the inflation reference rate at 5%.
  5. Monitor the commercial banks liquidity and adjust the SRD ratio if needed.
  6. Monitoring the commercial banks’ capital reserves and adjust further when required.
  7. Ease the exchange control requirements when required.
  8. Continue to issue Government Bonds.
  9. Maintain clear channels of effective communications with the financial institutions for adequate preparedness.
  10. Continue to be transparent and raise awareness of its monetary policy decisions through press releases to the public.
  11. Closely monitor the impacts of the pandemic in the financial system for early detection of any signs of vulnerability.
  12. 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 domestic activities for August 2020 was mostly weak. The primary sector noted lower agricultural exports during the month yet higher than August 2019. The secondary sector recorded some activity as projects continued to reach completion phases such as classrooms and school buildings. Repatriation efforts continued in August 2020 providing minimal activity for the services sector. Negative implications were still felt across the tourism sector with the ongoing COVID-19 pandemic. Overall, weakening consumption activities reflect weakening aggregate demand across the economy.

Prices continued to decline over the month and year to August 2020 recording deflation levels of 0.1% (monthly) and 1.6% (yearly). The monthly decline in inflation was driven solely by lower food prices (specifically domestic food prices). The annual deflation rate is higher than the deflation rate of 1.1% last month and 0.1% in August 2019. Both domestic and imported items contributed to the annual deflation. In particular, lower prices for electricity, food, kava Tonga, and transport items.

Official foreign reserves recorded yet again a new record high at a level of $556.1million. This increased slightly in the month by $0.1 million and significantly in the year to August 2020 by $64.3 million. This increase is owed to budget support receipts, grant and funds from donors and development partners, and financial assistance for COVID-19 preparations. Tonga’s remittances slowed in August 2020 indicating the possibility of the COVID-19 pandemic beginning to impact remitting countries particularly our friends and families abroad.

The total banking system still maintains its soundness supported by strong capital and adequate profits. The banks’ total loans to deposit ratio declined again in August 2020 to 75.5% from 76.8% in the previous month, below the 80% minimum. This was due to lower credit growth and higher deposits. The weighted average interest rate spread narrowed both over the month and year to August 2020 by 1.3 and 45.0 basis points respectively to 5.661%. This stems from declines in both lending and deposit rates.

In light of the above, the Reserve Bank continues to review its GDP forecasts and projects a moderate downturn in future economic growth. 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 still sound supported by high liquidity. 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.

+ - Press Release in Tongan Click to collapse

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 6 ‘o Novema 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 COVID-19.

  1. 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).
  2. 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).
  3. 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.
  4. 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.
  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.
  6. 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.
  7. Fakafaingofua’i ‘a e ngaahi tu’utu’uni fekau’aki mo e fetongi pa’anga muli´’i ha taimi ‘e fiema’u ai.
  8. Hokohoko atu pē ‘a e founga lolotonga ki hono fakatau ‘a e ngaahi pōnite ‘a e Pule’anga´.
  9. Tauhi ‘a e fetu’utaki vāofi mo e ngaahi kautaha fakapa’anga´ ke fakapapau’i ‘oku nau ‘i ha tu’unga mateuteu fe’unga.
  10. 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´.
  11. 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.
  12. 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 lipooti ‘e he Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, óku vaivai ange á e ngaahi ngāue faka’ekonōmika fakalotofonua´ í he māhina Áokosi 2020. Í he vakai ki he sekitoa ngoue´, vaotātāa mo e toutai´, naé holo á e lahi ó e ngoue naé fakatau atu ki tuápuleánga´ í he māhina ni, neongo óku kei māólunga ange pē á e tuúnga ko´ eni í hono fakahoa ki he Áokosi 2019. Naé hā mai e ngaahi ngāue mei he sekitoa fakatupu koloa í hono fakakakato e ngaahi polōseki ki hono langa ó e ngaahi loki ako mo e ngaahi ápiako é niíhi. Naé hoko atu hono fakafoki mai á hotau kainga ne tuku vaka´ í muli´ í Áokosi 2020 óne fakatupu ai ha ngaahi ngāue sií í he sekitoa ngāue´. Neongo ia, naé kei lahi ange pe uesia óku lolotonga hoko ki he sekitoa takimamata´ makatuúnga mei he COVID-19. Í hono fakakātoa´, óku holo á hono fakaáongaí ó e ngaahi koloa´ koeúhi koe holo á hono fiemaú e koloa fefakatauáki´ í he ’ekonōmika´.

Na’e hoko atu e holo ‘a e tuúnga hikihiki ó e totongi koloa fakalūkufua΄ í he māhina mo e taú ki Áokosi 2020 áki ‘a e peseti ‘e 0.1 (mahina) mo 1.6 (taú). Naé makatu’unga e holo he māhina´ ‘i he holo á e totongi ó e koloa meákai´ (tautefito ki he meákai fakalotofonua´). Ko e holo á e tuúnga hikihiki ó e totongi koloa´ i he taú´ ki Áokosi 2020, naé lahi ange ia he holo peseti ‘e 1.1 ‘i he māhina kuoósi´, mo e holo peseti ‘e 0.1 ‘i Áokosi 2019. Naé tupu á e holo fakataú´ mei he holo fakatouósi á e totongi ki he ngaahi koloa fakalotofonua´ mo e ngaahi koloa hū mai mei muli΄. Naé tautefito eni ki he holo á e totongi úhila΄, koloa meákai΄, Kava Tonga΄, mo e ngaahi totongi fekauáki mo e fefonongaáki΄.

Naé toe lekooti pē á e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ha tuúnga māólunga foóu ko e $556.1 miliona. Koe tupu sií eni í he māhina áki á e $0.1 miliona, ka koe tupu lahi í he taú ki Áokosi 2020 áki á e $64.3 miliona. Na’e makatu’unga ‘a e tupu ko´ eni mei´ he lahi ange á e ngaahi tokoni fakapaánga mei hotau ngaahi hoa ngāue langa fakalakalaka´, pea mo e ngaahi tokoni ki he mateuteu COVID-19. Naé kií holo á e talafi paánga taautaha mai mei muli´ ó ngali hā mei ai á e uesia é he COVID-19 á e ngaahi family mo e maheni óku talafi paánga mai mei he ngaahi fonua muli´.

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 toe 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), ki he peseti ‘e 75.5 mei he peseti ‘e 76.8 í he māhina´ kuo ósi´, ó 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). Na’e makatu’unga eni mei he holo ‘a e ngaahi nō (credit growth) kae tupu á e ngaahi fakahū paánga´ (deposits). Ko e ‘avalisi ‘o e totongi tupu ‘i he nō mo e fakahū pa’anga´ (weighted average interest rate spread) naé holo fakatouósi ‘i he māhina´ ‘aki ‘a e poini peseti ‘e 1.3, pea ‘i he ta’u´ ki Áokosi 2020 ‘aki ‘a e poini peseti ‘e 45.0 ki he peseti ‘e 5.661. Na’e makatu’unga eni mei he holo fakataha pē ‘a e totongi tupu ‘i he ngaahi nō (lending rates) mo e totongi tupu í he ngaahi fakahū paánga´ (deposit rates).

Makatu‘unga pea mei´ he ngaahi fakamatala kuo fakahā atu ‘i ‘olunga´, óku kei fakafuofua pe é he Pangikē Pule é holo á e tuúnga faka’ekonōmika ‘a e fonuaˊ í he kahaú vave maiˊ. Óku kei ámanaki pē é fakafiemālie pē ‘a e tuúnga ó e pa‘anga talifaki ‘i mulí´ ‘o lahi ange ‘i he māhina ‘e 3 ‘o e koloa hū maiˊ, pea kei ma’ulalo pē ‘á e tu’unga ‘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΄.