The National Reserve Bank of Tonga’s board of directors at its meeting on the 7th September 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 local partial indicators reflected a generally positive growth in June 2017. From the primary sector, despite the slight decline in agricultural exports by 49.0 tonnes (6.1%) marine exports recorded the highest volume of exports for the year so far at 399.8 metric tonnes, as 6 foreign vessels unloaded their catch at Tonga’s port. The activities in the secondary sector also showed positive activities. Individual housing loans and business construction loans increased by $2.4 million (1.1%) and $0.5 million (5.0%) respectively over the month which supported the construction sector. The services sector indicated a mixed growth over the month as container and vehicle registrations declined by 4.2% and 13.0% respectively. However, international arrivals increased by 14.4%, attributed to the annual church conferences and the whale watching season. This supports the tourism sector and spillover effects to other sectors such as the transportation and trade sectors.
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) fell to $283.8 million as a result of higher cash withdrawal made by the commercial banks from the Reserve Bank’s vault. The loans to deposit ratio of banks rose to 75.4% from 74.5% last month, but 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. Furthermore, the weighted average interest rate spread widened to 5.7% due to a decline in the decline in the weighted average deposit rate, more specifically, demand deposit and saving deposit rates whilst the weighted average lending rate rose slightly.
The foreign reserves rose by $15.6 million to $407.9 million in June 2017 due mainly to the receipt of grants by the Government for technical assistance and other current expenditures during the month. 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 rose by 10.3% over the year to June 2017. This was due to mainly to an 11.7% rise in imported prices which largely reflected the impact of the new customs duty and excise tax introduced in July 2016. Similarly, the domestic annual inflation rate rose by 8.7% 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 on 1st July 2016, 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 7 ‘o Sepitema 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 Pulé, Sione Ngongo Kioa, na’e tupu ‘a e ngaahi ngāue faka’ekonōmika fakalotofonuá ‘i Sune 2017. Fakatatau ki he ola ‘o e ngoue mo e toutai΄ (primary sector), neongo ‘a e holo si’i ‘a hono uta atu e ngoue ki mulí ‘aki ‘a e toni ‘e 49.0 (peseti ‘e 6.1), na’e ma’olunga ‘a e lahi ‘o e toutai ne uta atu ki muli´, ‘a ia ko e metuliki toni fakakātoa ‘e 399.8 ‘a ia ko e ma’olunga taha ia he ta’u΄ ni. Na’e makatu’unga eni mei he vaka toutai muli ‘e 6 na’e fakahifo ‘enau toutai´ ‘i he taulanga ‘o Tonga΄ ni. ‘Oku hokohoko atu ai pē tupu ‘a e ngaahi ngāue ‘i he sekitoa ‘o e fakatupu koloá (secondary sector). Na’e lahi ange ‘a e nō langa fale taautaha ‘i he mahina ni, ‘o tupu ‘aki ‘a e $2.4 miliona (1.1%), pea tupu $0.5 miliona (5.0%) ‘a e nō langa ‘a e ngaahi pisinisi΄ ‘a ia ‘oku tokoni ia kihe tupu ‘a e sekitoa langa΄. Na’e fetō’aki ‘a e tupu ‘i he sekitoa ki he ngaahi ngāue (tertiary sector) ‘i he lolotonga ‘o e mahiná, ‘a ia na’e holo ‘a e lahi ‘o e ngaahi koniteina ‘aki ‘a e peseti ‘e 4.2 pea holo mo e lesisita ‘o e saliote misini na’e hū mai mei mulí ‘aki ‘a e peseti ‘e 13.0. Kaekehe, na’e kake ‘a e tokolahi ‘o e tu’uta mai ki Tonga ní mei tu’apule’angá ‘aki ‘a e peseti ‘e 14.4, koe’uhi΄ ko e konifelenisi fakata’u ‘a e ngaahi siasi΄ pea mo e fa’ahita’u mamata tofua’a΄. Na’e tokoni ai pe ‘eni ki he tupu ‘a e sekitoa takimamata΄, kae’uma’a΄ ‘e ne kaunga lelei ki he ngaahi sekitoa kehe ‘o hangē ko e fefononga’aki mo e fefakatau’aki΄.
‘Oku kei ‘i he tu’unga lelei ‘aupito ‘a e fai fatongia ‘a e ngaahi pangikē fakakomēsialé, ‘o makatu’unga mei he tu’unga fakafiemālie ‘a ‘enau tu’unga tupú (profitability) pea pehē ki he kei ‘i he tu’unga mā’ulalo ai pē ‘a e ngaahi nō ‘oku palopalemá. Na’e holo ‘a e pa’anga ngāue (liquidity) ‘a e ngaahi pangikē ki he $283.8 miliona, ‘o tupu ia mei he lahiange ‘a e toho pa’anga ‘a e ngaahi pangikē fakakomēsialé mei he Pangike Pulē. Na’e hiki hake ‘a e lahi ‘o e ngaahi nō ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa’angá (loans/deposit ratio) mei he peseti ‘e 74.5 ‘i Mē ki he peseti ‘e 75.4 ‘i Sune. ‘Oku kei ma’ulalo pē ‘eni ‘i he tu’unga kuo tu’utu’uni ‘e he Pangike Pule´ ke a’usia ‘e he ngaahi pangike´, ‘a ia ko e pēseti ‘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 hiki 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 holo ‘a e ‘avalisi ‘o e totongi tupu ‘i he fakahū pa’anga΄ (weighted average deposit rate). Na’e lahiange ‘a e holo ‘i he fakahū pa’anga taimi nounou (demand deposit) pea mo e fakahū pa’anga tohi pangkē (savings deposit) ‘o fakahoa ki he ki’i hiki si’i ‘i he ‘avalisi ‘o e totongi tupu ‘i he nō (weighted average lending rate).
Na’e hiki hake ‘a e pa’anga talifaki ‘i mulí (foreign reserves) ‘aki ‘a e $15.6 miliona ki he $407.9 miliona ‘i he faka’osinga ‘o Sune 2017, makatu’unga mei he hū mai ‘a e ngaahi pa’anga tokoni ki he Pule’anga΄. ‘Oku fakataumu’a ‘a e pa’anga tokoni ko ‘eni´ ki he ngaahi fakamole ‘a e pule’anga pea pehē foki ki he ngaahi tokoni fakatekinikale (technical assistance). ‘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´, ‘a ia ‘oku kei mā’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 hū mai mei muli´.
‘Oku hokohoko atu ai pē ‘a e hikihiki ‘i he totongi koloa fakata’ú, ‘o hiki ‘aki e pēseti ‘e 10.3 ‘i he faka’osinga ‘o e ta’ú ki Sune 2017. ‘Oku makatu’unga ‘a e hiki fakata’u ko ‘ení mei he ngaahi totongi tute fo’ou ne fakahoko ‘i Siulai 2016, ‘a ia na’a ne hiki’i hake ai ‘a e totongi ‘o e ngaahi koloa hū mai mei mulí ‘aki ‘a e peseti ‘e 11.7. Na’e hiki hake foki mo e totongi koloa fakata’u fakalotofonua΄ ‘aki ‘a e peseti ‘e 8.7 makatu’unga mei he lahi e fetō’aki ‘i he totongi ‘o e koloa me’akai fakalotofonuá, hiki e totongi ‘o e ‘uhila΄, pea mo e si’isi’i ange ‘a e lahi ‘o e kava-Tongá.
‘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 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.
