The National Reserve Bank of Tonga’s board of directors at its meeting on the 16th May 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 Statistics Department recently released Tonga’s 2016-17 Real Gross Domestic Product (GDP) of 5.0% reaching its highest growth since 1998-99. The Governor of the Reserve Bank, Sione Ngongo Kioa, stated that the recovery works from the destruction caused by Tropical Cyclone (TC) Gita contributed to driving domestic economic activities during the month. Partial economic indicators were positive over the month. In the tertiary sector, total loans slightly rose over the month, and the total container registrations and international air arrivals also increased in March. The in-kind donations and picking up of trade activities following the cyclone contributed to the higher container registrations. The total agricultural exports increased driven by a rise in exported volume of root crops particularly yam reflecting its harvesting season. The exports of coconuts also increased in March indicates the increase in supply following the cyclone. Activities in the secondary industry remained positive supported by higher loans to individual housing and business manufacturing sectors.
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) rose over March due mainly to a rise in deposits by the commercial banks to the Reserve Bank vault which coincided with a decline in currency in circulation. The banks’ total loan to deposit ratio (including Government Development Loan (GDL scheme) slightly increased from last month. Total loans to deposit ratio (excluding GDL) remained stable in March. It continues to remain below the 80% minimum 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 March, driven by a rise in the weighted average lending rate which was partially offset by a rise in the weighted average deposit rate.
The foreign reserves decreased slightly to $447.7 million in March 2018 due to higher payments mainly for professional services and imports of wholesale and retail goods. This is equivalent to 8.0 months of import cover, which is still above the Reserve Bank’s minimum range of 3 – 4 months.
The official headline inflation rate for March 2018 is yet to be released by the Statistics Department. However, the impact of TC Gita in February on the domestic food supply is expected to push domestic inflation upward. Over the year, the headline inflation is anticipated to be around 4.0% compared to 3.4% in February 2018. The anticipated annual headline inflation is due to higher expectations in the price of food, transportation, tobacco, alcohol and kava-Tonga.
The growth outlook for Tonga remains positive in the years ahead. The Reserve Bank will revise its growth estimates to be published in its Monetary Policy Statement. 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. Inflation is anticipated to remain below 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 16 ‘o Mē 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 fakatalopiki 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 tuku mai ‘e he Potungāue Sitetisitika´ ‘a e fakafuofua ki he tu’unga totonu ‘o e tupu faka’ekonōmika ‘a Tonga΄ ni ko e peseti ‘e 5.0 ‘i he 2016/17, ‘a ia ko e tu‘unga ma’olunga taha eni kuo a’u ki ai talu meiˊhe ta‘u 1998/99. Na’e fakahā ‘e he Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, na’e tokoni ‘a e ngaahi ngāue fakaakeake mei he Saikolone ko Gita´ ki he lelei ange ‘a e ngaahi ngāue faka’ekonōmika ‘i he lolotonga ‘o e māhina΄. ‘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´. Na’e lahiange mo e ngaahi koniteina na’e lesisita´ pea mo e toe tokolahi ange ‘o e kakai ne tu‘uta vakapuna mai ki Tongaˊni mei tu‘apule‘anga´. Na’e hoko ‘a e lahi ange ‘a e ngaahi tokoni me’a’ofa mo e toe kake ‘a e fefakatau’aki΄ ‘i he hili ‘a e saikolone΄ ke tokoni ia ki he toe lahi ange ‘o e ngaahi koniteina ne tū’uta mai ki Tonga ni΄. Na’e hiki hake 'a e lahi 'o e ngoue na’e uta ki tu'apule'anga΄ ‘o fakatupunga ia meiˊ he toe lahi ange ‘a hono hū atu ‘o e ngoue foha΄, tautautefito ki he ‘ufiˊ ‘o hā mahino mei heni ‘a e kamata ‘o e utu ta’uˊ. Na’e lahi ‘aupito mo hono hū atu ‘o e niu΄ he māhina ko Ma’asiˊ tupu meiˊhe lahi ‘o e niuˊ hili koia e matangiˊ. Na’e kei ‘i he 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 ‘oku nau fa’u koloaˊ (manufacturing).
‘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 Ma’asi ‘o makatu’unga meiˊhe lahi ange ‘a e fakahū pa’anga ‘a e ngaahi pangikē fakakomēsiale ki he Pangikē Pule΄ ‘o fenāpasi ia mo e holo ‘a e lahi ‘a e pa’anga ‘oku lolotonga ngāue’aki´ (currency in circulation). Na’e hiki si’i e lahi ‘o e ngaahi nō (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 Ma’asi. Na’e tu’uma’u pē ‘a e lahi ‘o e ngaahi nō (‘ikai 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 Ma’asi. ‘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 Ma’asiˊ. Na‘e makatu‘unga eni meiˊhe lahi ange ‘a e kake ‘i he ‘avalisi ‘o e totongi tupu ‘i he nō (weighted average lending rate) ‘i hono fakahoa ki he hiki ‘a e ‘avalisi ‘o e totongi tupu fakahū pa’anga´ (weighted average deposit rate).
Na‘e holo si’i ‘a e pa’anga talifaki ‘i muli´ (foreign reserves) ki he $447.7 miliona ‘i Ma’asi 2018, makatu‘unga meiˊ he lahiange ‘a e pa’anga na’e totongi ki he ngaahi sēvesi fakapolofesinaleˊ pea mo e hū koloa mai mei muli΄. ‘Oku fe‘unga ‘a e tu‘unga lolotonga ‘o e pa‘anga talifaki´ pea mo e māhina ‘e 8.01 ‘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΄ ‘i Ma’asi. Ka ‘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´ ‘i Fepueli. ‘Oku fakafuofua ‘e tupu ‘aki e peseti ‘e 4.0 ‘a e hikihiki fakata’u ‘i he totongi fakalūkufua ‘o e koloa΄ ‘i Ma’asi ‘o fakahoa ki he tupu fakata‘u peseti ‘e 3.4 ‘i Fepueli 2018. 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´ pea ko e ngaahi fakafuofua fakamuimui taha ‘oku ‘amanaki ke tuku atu ia ‘e he Pangikē Puleˊ ‘i he’ene Fakamatala Fokotu‘utu‘u Ngāue Fakapa‘angaˊ (Monetary Policy Statement). Ko e pa‘anga talifaki ‘i mulí ‘oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie pē ‘o 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. Ka neongo ia, ‘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. ‘E ala uesia ‘a e fakafuofua ko ‘eni´ ‘i he kamata ‘a hono tā fakafoki ‘a e nō ‘a e Pule’anga´ mei he Pangikē Fefakatau’aki ‘a Siainá (EXIM Bank of China). ‘Oku toe fakafuofua ‘e ‘i he tu’unga ma’ulalo pe ‘a e hikihiki ‘i he totongi koloaˊ ‘i he kaha’u vave maiˊ pea ‘e ma’ulalo pē ia ‘i he tu’unga fe’unga (reference rate) ko e pēseti ‘e 5 ‘i he fakafuofua ‘a e Pangikē Puleˊ ‘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.
