The National Reserve Bank of Tonga’s board of directors at its meeting on the 17th August 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, stated that the indicators of economic activity suggest slowed growth over the month. Indicators showed mixed results in the primary sector where the total export volume of agricultural products declined, however, domestic food supply continued to improve as reflected in the decline in food prices. Activities in the secondary sector continued to be supported by the on-going construction activities, as the growth in banks’ lending for housing and the construction sector continued to increase. Electricity consumption however declined which indicates a slowdown in economic activities over the month. Indicators of the tertiary sector were mixed over the month with prominent results from the banking sector reflected in the banking system’s profitability continued to improve. The travel receipts had increased despite a fall in total air arrivals which coincided with less international flights arriving during the month. The total number of container registrations also declined over the month.
Consumption activities slowed over the month of June 2018. Despite an increase in household lending and the distribution of the Government’s cash hand-outs to some of the cyclone affected families, the Consumption Tax (CT) collected over the month declined in line with a fall in businesses’ total sales. Consumption activities however remained strong over the year. Year on year growth shows higher CT collected coinciding with a rise in total sales. Remittances and banks’ lending to households also increased which may have translated into solid consumer spending. Going forward, consumption spending is expected to be strong supported by the continuous increase in new loan commitments to households and the expected continued increase in remittance receipts.
The banking system remained sound and maintained strong capital position, supported by comfortable profitability, and non-performing loans continued to remain low. Liquidity in the banking system (reserve money) increased over June in line with growth in banks’ deposits which triggered an increase in the required reserves and the decline in the loans to deposit ratio. This ratio continued to remain below the 80% minimum loan to deposit ratio which indicates excess liquidity in the banking system and that there is capacity for further lending by the banks. Over the year, both banks’ deposits and loans increased indicating improved access to banks’ financial services. The total access points in the banking system increased making financial services more widely accessible. The weighted average interest rate spread widened over June due to an increase in the weighted average lending rate and a decline in the weighted average deposit rate.
The foreign reserves rose to $468.7 million in June 2018 due mainly to receipts of cyclone relief funds and other project funds. This is equivalent to 7.8 months of import cover.
Food prices remained the main factor behind easing of headline inflation. The annual headline inflation rate slowed to 5.9% in June compared to a 9.4% last month and 10.7% in June 2017, which is closer to the Reserve Bank’s reference rate of 5%. The slowdown of annual inflation was mainly due to developments in domestic food prices as the annual growth in June 2018 was much lower than it was in May 2018. The increase in imported prices was due to higher prices of imported meat, fuel and tobacco. Food prices continued to be the lead contributor to domestic prices followed by Kava-Tonga and coral aggregates.
Despite the largely slowed growth in June, developments in all sectors of Tonga’s economy still support the strong growth that is expected in 2017/18 however weather uncertainty pose a risk to the outlook. According to the latest Climate Update from the Tonga Meteorological Service2, rainfall is forecasted to be average to below average in August to October 2018 and below average for all of Tonga from November to January 2019. This will negatively affect activities in the primary sector and other sectors of the economy in the future. The level of foreign reserves is expected to remain at comfortable levels and inflation is anticipated to fall below the Reserve Bank’s inflation reference rate of 5% per annum at the end of 2018. The banking system is expected to continue to remain strong.
In light of the above developments and the outlook on the monetary policy targets, the current monetary policy stance is considered appropriate in the medium term. The Reserve Bank will continue to remain vigilant, closely monitor developments in the domestic and global economies and may change its monetary policy setting to support its monetary policy objectives.
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 17 ‘o ‘Aokosi 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 meiˊhe 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 fakahā ‘e he Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, na’e māmālie ange ‘a e tupu ‘a e ngaahi ngāue faka’ekonōmika´ ‘i he lolotonga ‘o e māhina ko Sune´. Na’e fetō’aki e ngaahi me’afua ‘i he sekitoa ki he ngoue´, toutai´ pea mo e vao ‘akau´ (primary sector), ‘a ia na’e holo ‘a hono uta atu e ngoue ki muli´, kā na’e kei lahi pē ‘a e ngaahi me’akai fakalotofonua´ ‘o hā eni mei he holo ‘a e totongi ‘o e me’akai fakalotofonua ´. ‘Oku hokohoko atu ai pē ‘a e tupu ‘a e ngaahi ngāue ‘i he sekitoa ‘o e fakatupu koloa´ (secondary sector) ‘o hā mai ‘i he hokohoko ‘i he ngaahi ngaue langa´, tupu ‘i he nō langa fale taautaha´ pea pehē ki he nō langa fale fakapisinisi´. Na’e holo ‘a hono ngāue’aki ‘e he kakai´ ‘a e ma‘u‘anga ‘uhila´ ‘o hā mahino mei ai ‘a e holo e ngaahi ngāue faka’ekonōmika´. Na’e fetō’aki e ngaahi me’afua ‘i he sekitoa ki he ngaahi ngāue´ (tertiary industry) ‘i he lolotonga e māhina kā na’e ola lelei e sekitoa fakapangikē, ‘o hā ia mei he hokohoko lelei e tupu ‘a e ngaahi pangikē. Na’e kake ‘a e pa’anga hū mai mei he fefolau’aki´, neongo na’e holo e tokolahi ‘a e kakai ne tu‘uta vakapuna mai ki Tongaˊni mei tu‘apule‘anga´. Na’e fenāpasi eni mo e holo ‘i he lahi e vakapuna ne tu’uta mai ki Tonga ni ‘i he lolotonga ‘o e māhina´. Na’e toe holo mo e lahi e koniteina na’e lēsisita ‘i he māhina´.
Na’e holo mo e ngaahi fiema’u´/ fengāue’aki´ (consumption activities) ‘i Sune 2018 fakahoa ki Mē 2018. Neongo na’e tupu ‘a e ngaahi nō taautaha´ pea tufa atu ‘e he Pule’anga´ ‘a e tokoni ki he ngaahi famili ne uesia ‘e he saikolone´, ka na’e ha mai ‘a e holo ‘i he pa’anga hū mai mei he tukuhau ngāue’aki´ (Consumption Tax) ‘o fenāpasi ia mo e holo ‘i he pa’anga hū mai mei he fakatau ‘a e ngaahi pisinisi´. Kā neongo ia, na’e ‘i he tu’unga mālohi pē ‘a e ngaahi fiema’u´ ‘i he lolotonga ‘a e ta’u´. Na’e fenāpasi pē ‘a e lahi e pa’anga hū mai mei he tukuhau ngāue’aki´ pea mo e pa’anga ne ma’u mei he fakatau ‘a e ngaahi pisinisi ‘i he lolotonga ‘a e ta’u´. Na’e tupu ‘a e talafi pa’anga mei muli´ mo e ngaahi nō taautaha´ ‘a ia ne tokoni eni ki he toe lahi ange ‘a e ngaahi fakamole ‘a e kakai´. ‘Oku fakafuofua ‘e toe lahi ange ‘a e ngaahi fakamole´ ‘i he kaha’u´ ‘o tokoni’i ‘e he ngaahi nō fo’ou fakataautaha´ pea pehē ki he fakafuofua ‘e hokohoko atu ‘a e kake ‘i he talafi pa’anga mei muli´.
‘Oku kei ‘i he tu‘unga lelei pe ‘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 hiki hake ‘a e pa‘anga ngāue (liquidity) ‘a e ngaahi pangikē ‘i Sune´ ‘o fenāpasi mo e tupu ‘a e ngaahi fakahū pa’anga´ ‘o ne fakatupunga ai ‘a e kake ‘a e pa’anga kuo tu’utu’uni ke tauhi ‘i he Pangikē Pule´ (required reserve) pea mo e holo ‘i he lahi ‘o e ngaahi nō ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa‘anga´ (loans/deposit ratio). ‘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. ‘I he ta‘uˊ ki Sune 2018, na‘e kake ‘a e fakahū pa‘anga pea mo e nō, ‘o hā mei ai ‘oku ngāue ‘a e ngaahi fokotu‘utu‘u ngāue ‘a e ngaahi pangikē ke fakafaingofua‘i ‘a hono ngaue‘aki ‘a e ngaahi ngāue fakapa‘anga΄. Na‘e toe lahiange ‘a e ngaahi feitu‘u ‘oku malava ke ma‘u mei ai ‘a e ngaahi ngāue fakapa‘anga (access points) ‘a ia ‘oku mahino mei ai ‘oku faingofua ange ki he kakai ke fakahoko ‘enau ngaahi ngaue fakapa’anga΄. 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 Sune ‘o makatu‘unga meiˊhe kake ‘i he ‘avalisi ‘o e totongi tupu ‘i he nō (weighted average lending rate) pea mo e holo ‘i he ‘avalisi ‘o e totongi tupu fakahū pa’anga (weighted average deposit rate).
Na‘e tupu ‘a e pa’anga talifaki ‘i muli´ (foreign reserves) ki he $468.7 miliona ‘i Sune 2018, makatu‘unga meiˊ he lahiange ‘a e pa’anga hū mai tokoni ki he saikolone´ pea mo e ngaahi pa’anga polōseki´. ‘Oku fe‘unga ‘a e tu‘unga lolotonga ‘o e pa‘anga talifaki´ pea mo e māhina ‘e 7.8 ‘o e koloa mo e ngaahi ngāue hū mai mei muliˊ.
Na’e kei hoko pē ‘a e holo ‘i he totongi ‘o e me’akai´ ke ne tokoni’i ‘a e holo ‘a e hikihiki ‘i he totongi fakalūkufua ‘o e koloa´. Na’e hokohoko atu ai pē ‘a e holo ‘i he totongi fakalūkufua ‘o e ngaahi koloa fakata’u´ ‘o ofi ki he tu’unga fe’unga kuo tuku mai ‘e he Pangikē Pule´, ‘a ia ko e peseti ‘e 5. Ko e holo eni ki he peseti ‘e 5.9 ‘o fakahoa ki he peseti ‘e 9.4 ‘i he mahina kuo’osi´ pea peseti ‘e 10.7 ‘i Sune 2017. Na’e makatu’unga eni mei he fe’unuaki ‘i he totongi fakalotofonua ‘o e me’akai´, ‘a ia ko e tupu fakata’u ki Sune 2018 na’e ma’ulalo ange ia ‘i he tupu fakata’u ‘i Mē 2018. Na‘e hiki ‘a e totongi koloa hū mai mei muli΄ ‘o makatu‘unga mei he hiki hake ‘a e totongi ‘o e kakano’i manu hū mai mei muli΄, totongi lolo΄ pea mo e sikaleti΄. Na‘e hiki ‘a e totongi koloa fakalotofonua΄ makatu’unga mei he hikihiki ‘a e ngaahi koloa me’akai´, kava-Tonga pea mo e loli makamaka fakatau΄.
Neongo ‘a e māmālie ange ‘a e tupu ‘a e ngaahi ngāue faka’ekonōmika´ ‘i he lolotonga ‘o e māhina ko Sune´, na’e kei ha mai ‘oku kei ‘I he tu’unga fakafiemalie pe ‘o fenapasi ia mo e fakafuofua ‘e tupu mā’olunga ‘a e tu’unga faka’ekonōmika ‘a e fonua´ ‘i he 2017/18, kā ‘e ala uesia ‘a e fakafuofua ko ‘eni´ mei he ngaahi feliliuaki e ‘ea´. Fakatatau ki he fakamatala fakamuimuitaha kuo tuku mai ‘e he Tafa’aki Talamatangi ‘a Tonga, ‘oku fakafuofua ‘e ma’ulalo ange ‘a e ‘uha´ ‘i he ‘avalisi ‘i ‘Aokosi ki ‘Okatopa 2018 pea ‘e toe ma’ulalo ange ‘i he ‘avalisi´ ki Tonga ni kātoa mei Nōvema ki Sanuali 2019. ‘E ala uesia heni e ngaahi ngāue ‘i he sekitoa ngoue´ mo e toutai´ pea pehē foki ki he ngaahi sekitoa kehekehe pē ‘i he kaha’u´. Ko e pa‘anga talifaki ‘i mulí ‘oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie pē. ‘Oku toe fakafuofua ‘e ‘i he tu’unga ma’ulalo pē ‘a e hikihiki ‘i he totongi koloaˊ pea ‘e ma’ulalo pē ia ‘i he tu’unga fe’unga (reference rate) ko e pēseti ‘e 5 ‘i he faka’osinga ‘o e 2018. ‘Oku hokohoko atu ai pē ‘a e tu’unga fakafiemālie ‘a e ngaahi pangikē.
Koe’uhī ko e ngaahi fakamatala ko ‘eni´, ‘e hokohoko atu ai pē ‘a e ngaahi tu’utu’uni ngāue fakapa’anga lolotonga´. Pea ‘e kei hokohoko atu ai pē ‘a e tokanga ‘a e Pangikē Pule´ ki hono siofi mo muimui’i ofi e ngaahi fakalakalaka faka’ekonōmika fakalotofonua´ mo tu’apule’anga´, mo tu’u mateuteu ke liliu ‘a e ngaahi fokotu’utu’u ngāue fakapa’anga ‘o ka fiema’u pea mo fakapapau’i ‘e ‘ikai ke kaunga kovi ‘a e ngaahi fakalakalaka ‘oku hoko´ ki he tupu faka’ekonōmika ‘oku ma’uma’uluta mo tolongaˊ.
