The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 17th December 2019, 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 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%, and
- maintain the inflation reference rate at 5%.
The Governor of the Reserve Bank, Sione Ngongo Kioa, reported that domestic economic activities continued to reflect mixed growth in October 2019. The primary sector showed mostly positive performances with proceeds for marine exports increasing by $0.2 million (20.2%) whilst agricultural export proceeds remained the same. Meanwhile, the secondary and tertiary sectors showed varied growths with housing loans declining by $0.4 million (0.2%) whereas import payments for construction materials rose by $0.9 million (54.5%). The total number of international arrivals declined during October by 550 passengers (5.7%) whilst cruise ship arrivals and vehicle registrations rose. Container registrations decreased by 394 (30.6%) due to lower private and business container registrations. The measles outbreak that started in October has escalated leading to cancellation of schools and major events such as price giving ceremonies, reunions and other scheduled events which may contribute to slowing economic activities in the upcoming months.
The banking system continues to be sound supported by strong capital and adequate profits. The banks’ total loans to deposit ratio slightly increased from 78.6% to 79.1% over the month, reflecting loans growing while deposits fell. This still remains very close to the 80% minimum loan to deposit ratio. However, the liquidity in the banking system remains relatively high indicating existing capacity is still available for further lending. The weighted average interest rate spread narrowed over the month and year by 1.7 basis points and 10.5 basis points respectively to 6.04%, due to a decrease in both weighted average lending rates and weighted average deposit rates.
The level of official foreign reserves fell by $1.5 million to $489.3 million, (equivalent to 7.8 months of imports cover) attributed to higher offshore investments and payments for services during October 2019. Over the year, foreign reserves rose by $32.0 million as a result of higher receipts of budget support, grants and project funds from development partners.
Headline inflation increased by 0.5% over the month. Both domestic and imported prices rose by 0.9% and 0.2% respectively. Domestic prices increased in October due to higher prices of local food such as root crops, vegetables, seafood and eggs whilst imported prices rose driven by higher fuel prices, and imported food items such as mutton, apples, sugar, and flour. Annual headline inflation rose slightly by 0.2% in October 2019 compared to 0.4% in September and 6.2% inflation in October 2018 resulting to lower domestic prices. In particular, domestic prices fell by 1.3% attributing to lower prices of kava-Tonga, Tongan tobacco, electricity and local food prices such as root crops and vegetables. This offset a 1.5% annual rise in import prices.
The medium-term outlook on Tonga’s economic performance remains positive, yet weather uncertainty and global uncertainties continue to pose a risk to this expectation. The level of foreign reserves is projected to remain at a comfortable level, and inflation is expected to remain below the reference rate of 5%. The banking system is anticipated to continue to remain sound.
Given the above developments and outlook, the current monetary policy stance is considered appropriate in the medium term. The Reserve Bank continues to adopt measures to encourage the utilization of the excess liquidity in the banking system to increase lending, support domestic economic activities, and strengthen the monetary policy transmission mechanism. Meanwhile, the Reserve Bank will continue to remain vigilant and closely monitor external and domestic developments and may change its monetary policy setting to support its monetary policy objectives.
Tu'utu'uni 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 17 ‘o Tisema 2019, 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, ki 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´.
- Ke kei 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);
- 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);
- Ke kei 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; pea
- 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.
Na‘e fakahā ‘e he Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, ’oku kei hoko atu pē fetō’aki ‘a e ngaahi ngāue faka‘ekonōmika fakalotofonua´ ‘i he māhina ‘Okatopa 2019. Na’e fakafiemālie pē ‘a e ola mei he sekitoa Ngoue´, Toutai´ mo e Vao’akau´, ‘a ia na’e tupu ‘a e pa’anga hū mai mei hono uta atu ‘o e toutai´ ki muli´ ‘aki ‘a e $0.2 miliona (20.2%), kae tu’uma’u pē ‘a e lahi ‘o e pa’anga hū mai mei hono uta atu ‘o e ngoue´. Ka neongo ia´, na’e fetō’aki ‘a e ngaahi ola ne hā mai mei he sekitoa Fakatupu koloa´, ‘aki ‘a e holo ‘a e lahi ‘o e ngaahi nō fale´ ‘aki ‘a e $0.4 miliona (0.2%), kae kake ‘a e totongi ki hono hū mai ‘o e ngaahi koloa langa mei muli´ ‘aki ‘a e $0.9 miliona (54.5%). Na’e holo foki mo e tokolahi ‘o e kau folau mei tu’apule’anga ne tū’uta mai ki Tonga´ ni ‘i he māhina ‘Okatopa´ ‘aki ‘a e toko 550 (5.7%), ka e lahi ange ‘a e ngaahi vaka meili mo e ngaahi me’alele ne lesisita´. Na’e toe holo foki mo e lahi ‘o e ngaahi koniteina na’e lesisita´ ‘aki ‘a e koniteina ‘e 394, ‘a ia na’e holo fakatou’osi pe ‘a e ngaahi koniteina pisinisi´ mo e koniteina taautaha´. Na’e kamata ‘a e mafola e mahaki misele´ ‘i Tonga´ ni ‘i ‘Okatopa ‘o faka’au pē ke toe lahi ange ‘o makatu’unga ai hono tāpuni fakataimi ‘a e ngaahi ‘apiako´, mo hono kaniseli ‘a e ngaahi katoanga lahi hangē ko e tanaki tu’unga fakata’u ‘a e ngaahi ako´, ngaahi fakataha fakafāmili mo e ngaahi katoanga kehe pē ne ‘osi fokotu’utu’u ke fakahoko. ‘Oku ‘amanaki ‘e ‘i ai ‘a e kaunga e fakatamaki ko´ eni ki ha toe māmālie ange ‘a e ngaahi ngāue faka’ekonomika´ ‘i he ngaahi māhina ka hoko mai´.
‘Oku fakafiemālie pē ‘a e tu’unga ‘oku ‘i ai ‘a e ngaahi pangikē fakakomēsiale´, ‘o kei poupou pē ki ai ‘a e mālohi fe‘unga á e ivi ‘enau pa‘anga ngāue´, pehē ki he‘enau ngaahi tupu´ (profits). Ko e peseti ‘o e ngaahi nō ‘i hono fakahoa ki he fakahū pa‘anga´ (loans/deposit ratio), na’e tupu ‘i he māhina´ ni mei he 78.6% ki he 79.1%, ‘o hā mai ai ‘a e lahi ange ‘a e ngaahi nō kuo tuku atu´ ‘i he fakahū pa’anga΄. ‘Oku kei ofi pē eni ‘i he 80% ‘oku fokotu’u ‘e he Pangikē Pule´ ki he lahi ‘o e ngaahi nō ‘oku tuku atu´ fakatatau ki he lahi ‘o e fakahū pa’anga΄ ‘a ia ‘oku . Kaekehe, ‘oku mahino mai ‘oku kei toe lahi pē ‘a e hulu ‘i he pa’anga ngāue (liquidity) ‘a e ngaahi pangikē ‘a ia ‘oku malava ke kei nō atu ki tu’a´. Na‘e holo ‘a e ‘avalisi ‘o e totongi tupu ‘i he nō mo e fakahū pa’anga´ (weighted average interest rate spread) ‘i he māhina´ mo e ta’u´ ‘aki ‘a e poini peseti ‘e 1.7 mo e 10.5 ki he 6.04%, ‘a ia na’e holo fakataha pē ‘a e totongi tupu ‘i he nō (lending rates) mo e totongi tupu ‘i he fakahū pa‘anga´ (deposit rates).
Na‘e holo ‘a e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ‘i ‘Okatopa ‘aki ‘a e $1.5 miliona ki he $489.3 miliona (fe‘unga mo e māhina ‘e 7.8 ‘o e koloa mo e ngaahi ngāue hū mai mei muliˊ). Na‘e makatu‘unga ‘a e holo ko eni΄ mei he lahi ‘a e ‘ave pa’anga ‘inivesimeni mo e totongi ‘o e ngaahi sēvesi ki muli´. ‘I he lolotonga ‘o e ta’u´, na’e kei kake pe ‘a e pa’anga talifaki ‘i muli´ ‘aki ‘a e $32.0 miliona, koe’uhi ko e hū mai ‘a e ngaahi pa’anga tokoni fakapatiseti ‘a e pule’anga´, mo e pa’anga tokoni ki he ngaahi polōseki lalahi´ mei he ngaahi hoa ngaue fakalakalaka´.
Na‘e hiki ‘a e tu’unga ‘o e totongi koloa fakalūkufua΄ ‘i he māhina ‘Okatopa´ ‘aki ‘a e 0.5%. Na’e hiki lōua pē ‘a e ngaahi totongi fakalotofonua΄ mo e ngaahi totongi koloa hū mai mei muli΄ ‘aki ‘a e 0.9% mo e 0.2%. Ko e hiki ‘i he totongi fakalotofonua΄ ‘i ‘Okatopa΄ na‘e makatu’unga ia mei΄ he hiki ‘a e totongi me’akai fakalotofonua´ hangē ko e ngoue foha´, vesitapolo´, me’akai mei tahi΄ mo e fua’imoa΄. Ko e hiki ‘a e totongi ‘o e ngaahi koloa hū mai mei muli΄ na’e tupu ia mei he hiki ‘a e totongi lolo´ mo e koloa me’akai hū mai´, hangē ko e kakano’i sipi΄, ‘apele΄, suka΄ mo e mahoa’a΄. Na’e tupu si’isi’i pe ‘a e totongi koloa fakalūkufua΄ ‘i he ta’u΄ ’aki e 0.2% ‘i ‘Okatopa 2019, ‘o fakahoa ki he hiki 0.4% ‘i Sepitema, mo e tupu 6.2% ‘i ‘Okatopa 2018, ‘o makatu’unga ‘i he holo ‘a e ngaahi totongi fakalotofonua΄. Ko e holo fakata’u ‘i he totongi ‘o e ngaahi koloa fakalotofonua΄ na’e fe’unga mo e 1.3% ‘a ia ko e holo ‘i he totongi ‘o e kava-Tonga΄, tapaka Tonga΄, ‘uhila΄ mo e me’akai fakalotofonua΄ ‘o kau ai ‘a e ngoue foha΄ mo e vesitapolo΄. Na’e malava eni ke ne holoki ‘a e hiki fakata’u 1.5% ‘i he totongi ‘o e ngaahi koloa hū mai mei muli΄.
‘Oku fakafuofua ‘e he Pangikē Pule´ ‘e fakalakalaka pē kimu’a ‘a e tu’unga faka’ekonōmika ‘a e fonua´ ‘i he kaha’u vave mai´. Kā ‘e malava ke uesia ‘a e fakafuofua ko ‘eni´ mei he ngaahi feliuliuaki ‘i he tu’unga ‘o e ‘ea´ pea mo e fetō’aki ‘a e tu’unga faka’ekonōmika fakamamani lahi΄. Ko e pa‘anga talifaki ‘i mulí´ ‘oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie pē, pea ‘oku ‘amanaki ko e hikihiki ‘i he totongi koloaˊ ‘e ‘ikai ma’olunga ange he 5%. Ko e ngaahi pangikē ‘oku fakafuofua ‘e ‘i he tu‘unga fakafiemālie pē mo ‘enau ngaahi ngāue΄. Makatu‘unga pea mei´ he ngaahi fakamatala kuo fakahā atu ‘i ‘olunga´, ‘oku kei taau ke hokohoko atu pē ‘a e ngaahi tu‘utu‘uni ngāue fakapa‘anga lolotonga´. ‘Oku kei fakahoko pē ‘e he Pangikē Pule´ hono siofi ke fakahoko ha ngaahi fokotu‘utu‘u ngāue ke faka‘ai‘ai ‘a hono ngāue’aki ‘a e hulu ‘i he pa’anga ngāue ‘a e ngaahi pangikē, ki hono nō atu ke tokoni ki he ngaahi ngāue faka’ekonōmika fakalotofonua´, pea ke poupou mo pātoloaki ha tupu faka‘ekonōmika ‘oku ma‘uma‘uluta mo tolonga. ‘Ikai ngata ai´, ka ‘oku tokanga aipē ‘a e Pangikē Pule´ ki hono muimui‘i ofi e ngaahi fakalakalaka faka‘ekonōmika fakalotofonua´ mo fakatu‘apule‘anga´, mo tu‘u mateuteu ke liliu ‘a e ngaahi fokotu‘utu‘u ngāue fakapa‘anga´ ‘o ka fiema‘u.
