The National Reserve Bank of Tonga’s board of directors at its meeting on the 11th April 2018 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, particularly to the growth sectors, in order to support economic growth and the recovery from Tropical Cyclone Gita, 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, reported that the domestic economic activities in February 2018 were affected due to the devastation by tropical cyclone (TC) Gita, which would also be reflected in the economic activities of upcoming months. However, partial economic indicators were mixed over the month. The total agricultural exports declined mainly driven by the decrease in exported volume of root crops such as cassava and giant taro. Exported marine products (excluding aquarium products) however rose as more tuna was exported during the month. Activities in the secondary sector remained positive which were supported by the growth in individual housing and business construction loans despite the decline in business manufacturing loans. In the tertiary sector, total loans slightly rose over the month. Nonetheless, container registrations decreased as both business and private containers declined. Vehicle registrations also fell mainly lower registrations for cars and other light vehicles. This was followed by a decline in air arrivals.
The banking system remained sound maintaining strong capital position, supported by comfortable profitability, and non-performing loans continued to remain low. Liquidity in the banking system (reserve money) increased over February, driven by an increase in currency in circulation as the commercial banks withdrew cash from the Reserve Bank vault to meet the public’s high demand for cash. The banks’ total loan to deposit ratio (including Government Development Loan (GDL) scheme) remained relatively stable in February, reflecting a proportionate growth in both total deposits and total loans. Total loans to deposit ratio (excluding GDL) slightly decreased in February. It continues to remain below the minimum 80% loan to deposit ratio which indicates excess liquidity in the banking system remains and that there is capacity for further lending by banks. The weighted average interest rate spread widened over February, which resulted from a rise in the weighted average lending rate outweighing the decline in the weighted average deposit rate.
The foreign reserves increased to $448.0 million in February 2018 driven by higher receipts of Government grants and cyclone relief funds from development partners and insurance payouts. This is equivalent to 8.1 months of import cover, which is still above the Reserve Bank’s minimum range of 3 – 4 months.
The official inflation rate is yet to be released by the Statistics Department. However, inflationary pressure is expected to remain in the near term partially due to the impact of TC Gita on the domestic food supply. The rise in fruit and vegetable prices is expected to push up domestic inflation. Over the year, the headline inflation is anticipated to be around 5.0% compared to 6.0% last month. The anticipated annual headline inflation is due to higher expectations in the prices of food, transportation, alcohol and kava-Tonga.
The growth outlook for Tonga remains positive in the years ahead as projected by the Reserve Bank in its August 2017 MPS. Growth for 2017/18 will be reduced due to the impact of TC Gita but anticipated to be higher in 2018/19. The level of foreign reserves is expected to remain at comfortable levels well above the minimum range of 3‐4 months of import cover supported by expected higher receipts of remittances and foreign aid. This will be partially offset by the projected rise in imports and the commencement of the Government’s principal loan repayment to the EXIM Bank of China. Upward inflationary pressure remains in the near term and is expected to remain above the Reserve Bank’s inflation reference rate of 5% per annum in 2018.The adverse weather conditions and higher import prices pose 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 ‘i he ‘aho 11 ‘o ‘Epeleli 2018, 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 ngāue’aki ‘a e hulu ‘i he pa’anga ngāue ‘a e ngaahi pangikē, ‘o fakafou mai ‘i hono tuku atu ‘a e ngaahi nō ki tu’a ke ne faka’ai’ai mo pātoloaki ‘a e tupu faka’ekonōmika ‘a e fonua´ pea mo tokoni ki he fakaakeake mei he Saikolone ko Gita (Tropical Cyclone Gita).
- 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 uesia ‘a e ngaahi ngāue faka’ekonōmika ‘i Fepueli 2018. Na’e makatu’unga eni mei he maumau na’e fakahoko ‘e he Saikolone ko Gita´ pea ‘e hā ia ‘i he ngaahi ngāue faka’ekonōmika ‘i he ngaahi māhina ka hoko´. Kaekehe na’e fetō’aki ‘a e ngaahi me’afua faka’ekonōmika´ ‘i he lolotonga ‘o e māhina´. Na‘e holo ‘a e lahi ‘o e ngoue ne uta atu ki tu‘apule‘anga´ ‘o makatu‘unga mei he holo ‘a hono uta atu ‘o e ngoue foha´ ‘o hangē ko e manioke´ pea mo e kape´. Na’e kake 'a e lahi 'o e toutai na’e uta ki tu'apule'anga΄ (‘ikai ke kau ki ai ‘a e ngaahi me’atahi ‘ikai ko ha ika – aquarium products) ‘o fakatupunga ia meiˊhe toe lahi ange ‘a hono hū atu e tuna´. Na’e tu’unga fakafiemālie pē ‘a e ngaahi ngāue ‘i he sekitoa ‘o e fakatupu koloa´ (secondary sector), tupu meiˊhe toe lahi ange ‘a e nō kuo tuku atu ki he langa fale taautaha´ pea mo e nō kuo tuku atu ki he ngaahi pisinisi langa´ neongo na’e holo ‘a e nō kuo tuku atu ki he ngaahi pisinisi ‘oku nau fa’u koloaˊ (manufacturing). ‘I he sekitoa ki he ngaahi ngāue´ (tertiary sector), na’e tupu ‘a e ngaahi nō kuo tuku atu´ ‘i he lolotonga ‘a e māhina´. Kā neongo ia, na’e holo ‘a e lahi ‘o e ngaahi koniteina na’e lesisita´ tupu meiˊhe holo ‘a e ngaahi koniteina fakapisinisi´ mo e taautaha΄. Na’e holo mo e lesisita ‘o e me’alele´ makatu’unga mei he si’isi’i ange ‘a hono lesisita ‘o e kā mo e ngaahi me’alele iikiˊ (light vehicles). Na’e toe holo mo e tokolahi ‘o e kakai ne tu‘uta vakapuna mai ki Tongaˊni mei tu‘apule‘anga´.
‘Oku kei ‘i he tu‘unga lelei ‘aupito ‘a e fai fatongia ‘a e ngaahi pangikē fakakomēsiale´, ‘o makatu‘unga meiˊhe tu‘unga fakafiemālie ‘a ‘enau tupu´ (profitability) pea pehē ki he kei ‘i he tu‘unga ma‘ulalo ai pē ‘a e ngaahi nō ‘oku palopalema´. Na‘e kake ‘a e pa‘anga ngāue (liquidity) ‘a e ngaahi pangikē ‘i Fepueli´, makatu’unga meiˊhe tupu ‘a e pa’anga ‘oku lolotonga ngāue’aki´ (currency in circulation). Na’e makatu’unga eni meiˊhe toe lahi ange ‘a e toho pa‘anga ‘a e ngaahi pangikē mei he Pangikē Pule´, ke feau ‘a e fiema’u ‘a e kakai ‘o e fonua´ ki he pa’anga´. Na’e tu’uma’u pē ‘a e lahi ‘o e ngaahi nō (kau ki heni ‘a e polokalama nō ‘a e pule’anga´) ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa‘anga´ (loans/deposit ratio) ‘i Fepueli, ‘o makatu’unga eni meiˊhe tupu tatau pē ‘i he ngaahi fakahū pa‘anga´ mo e ngaahi nō kuo tuku atu´. Na’e holo si’i e lahi ‘o e ngaahi nō (‘ikai kau ki ai ‘a e polokalama nō ‘a e pule’anga´) ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa‘anga´ (loans/deposit ratio) ‘i Fepueli. ‘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 kake ‘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) ‘i Fepueli. Na‘e makatu‘unga eni mei he kake ‘a e ‘avalisi ‘o e totongi tupu ‘i he nō (weighted average lending rate) ‘i hono fakahoa ki he holo ‘a e ‘avalisi ‘o e totongi tupu fakahū pa’anga´ (weighted average deposit rate).
Na‘e tupu ‘a e pa’anga talifaki ‘i muli´ (foreign reserves) ‘o a’u ki he $448.0 miliona ‘i Fepueli 2018, makatu‘unga meiˊhe lahi ‘o e ngaahi pa’anga tokoni ‘a e Pule’anga´ na’e hū mai, pa’anga tokoni ki he saikolone´ pea pehē ki hono totongi mai ‘o e ngaahi pa’anga malu’i´ (insurance payouts). ‘Oku fe‘unga ‘a e tu‘unga lolotonga ‘o e pa‘anga talifaki´ pea mo e māhina ‘e 8.1 ‘o e koloa mo e ngaahi ngāue hū mai mei muliˊ. ‘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´.
‘Oku te’eki ke tuku mai ‘e he Potungāue Sitētisitika´ (Statistics Department) ‘a e fika ‘ofisiale ki he hikihiki ‘i he totongi fakalūkufua ‘o e koloa΄. ‘Oku fakafuofua ‘e kei hokohoko atu ai pē ‘a e hikihiki ‘i he totongi koloaˊ ‘i he kaha’u vave maiˊ, makatu’unga mei he uesia ‘o e me’akai fakalotofonua´ ‘e he Saikolone ko Gita´. ‘Oku fakafuofua ko e hiki ‘i he totongi ‘o e fua’i’akau´ mo e vesitapolo´ tene fakatupunga ‘a e kake ‘i he totongi koloa fakalotofonua´. ‘Oku fakafuofua ‘e tupu ‘aki e peseti ‘e 5.0 ‘i Fepueli 2018 ‘o fakahoa ki he tupu peseti ‘e 6.0 ‘i he māhina kuo’osi´. Ko e hikihiki ko ‘eni´ ‘oku makatu’unga ia mei he fakafuofua ‘e toe lahiange ‘a e tupu ‘i he totongi ‘o e me’akaiˊ, fefononga’akiˊ, kava-malohiˊ (alcohol) pea mo e kava-Tongaˊ.
‘Oku kei tu‘uma‘u pē ‘a e fakafuofua ‘a e Pangikē Pule´ ‘e tupu mālohi ‘a e tu‘unga totonu ‘o e tupu faka‘ekonōmika ‘i he kaha’u´ ‘i he’ene Fakamatala Fokotu‘utu‘u Ngāue Fakapa‘anga ‘o ‘Aokosi 2017. ‘Oku fakafuofua ‘e holo ‘a e tupu faka‘ekonōmika ki he 2017/18 ‘o makatu’unga meiˊhe uesia na’e fakahoko ‘e he Saikolone ko Gita´, kā ‘oku fakafuofua ‘e tupu ma’olunga ‘i he 2018/19. Ko e pa‘anga talifaki ‘i mulí ‘oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie pē. ‘Oku makatu’unga eni meiˊhe 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 meiˊhe ngaahi hoa ngāue langa fakalakalaká, neongo ‘e ala uesia ‘a e fakafuofua ko ‘eni΄ mei he fakafuofua ‘e toe lahi ange mo e totongi ‘o e koloa hū mai mei mulí. Ko e kamata ‘a hono tā fakafoki ‘a e nō ‘a e Pule’anga´ mei he Pangikē Fefakatau’aki ‘a Siainá (EXIM Bank of China) te ne ala uesia ‘a e fakafuofua ko ‘eni´. ‘Oku toe fakafuofua ‘e kei hokohoko atu ai pē ‘a e hikihiki ‘i he totongi koloaˊ ‘i he kaha’u vave maiˊ pea ‘e lahi hake ‘i he tu’unga fe’unga ko e pēseti ‘e 5 ‘i he fakafuofua ‘a e Pangikē Puleˊ (reference rate) ‘i he 2018. Ka neongo iaˊ ‘oku malava ke uesia ‘a e ngaahi fakafuofua ko ’eniˊ 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 Puleˊ ki hono siofi mo muimui‘i ofi e ngaahi fakalakalaka faka’ekonōmika fakalotofonuaˊ mo tu‘apule‘angaˊ, mo tu‘u mateuteu ke liliu ‘a e ngaahi fokotu‘utu‘u ngāue fakapa‘angaˊ ‘o ka fiema’u, ke tauhi e ma’uma’uluta ‘a e tu’unga fakapa’angaˊ pea pehē ki he malu mo lelei ‘o e tafa’aki fakapa’angaˊ, pea mo fakapapau’i ‘e ‘ikai ke toe kaunga kovi ‘a e ngaahi fakalakalaka ‘oku hoko´ ki he tupu faka’ekonōmika ‘oku ma’uma’uluta mo tolongaˊ.
