The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 18th March 2020, 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 to growth sectors in order to support domestic economic activities and growth.
- 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 reflected mixed performances at the beginning of the year. In January 2020, the primary sector showed mixed movements over the month. The volume of agricultural exports continued to fall in January, although the yearly data reported positive growth reflecting better harvest of squash, taro and cassava. Most recent data on volumes of marine exports showed that marine exports significantly rose over the year to December 2019 due largely to exports of tuna. Both electricity consumption and production rose in January supporting the utility sector and indicating active economic activity. The road improvement projects is still expected to contribute favorably to the mining and quarrying sector. Both container and vehicle registrations declined over the month indicating a slowdown in wholesale & retail trade and consumption. International arrivals also declined reflecting a slow month for the tertiary sector.
The banking system remains sound supported by strong capital and adequate profits. The banks’ total loans to deposit ratio increased from 80.7% to 81.1% over the month depicting a higher decline in deposits relative to the decline in loans. This is still above the 80% minimum loan to deposit ratio. However, banking system remain very liquid indicating that existing capacity is still available for further lending. The weighted average interest rate spread widened over the month by 0.79 basis points, however narrowed by 17.68 basis points over the year to 6.03%.
The official foreign reserves declined in January 2020 by $4.6 million to $482.9 million, equivalent to 7.5 months of imports. However, the foreign reserves rose by $3.9 million over the year due to budget support receipts, grants, and project funds from development partners.
Inflation fell by 0.3% over the month as domestic prices declined by 0.6% while imported prices remained stable. Annually, inflation was recorded at 0.6% for January 2020 compared to 1.2% in December 2019 and 4.2% in January 2019. Domestic prices declined by 2.9% over the year partially offsetting the 3.6% rise for imported prices.
The Reserve Bank expect the economy to be negatively impacted by the global outbreak of the coronavirus contributing to a slowdown in economic activities both domestically and globally. However, foreign reserves is expected to remain at sufficient levels above the 3 months minimum threshold of imports cover. Inflation is also expected to remain below the 5% reference rate. The banking system is still very liquid and sound. The Reserve Bank remains alert, keeping a close watch on both its economic and financial indicators and standing ready to adjust its monetary policy settings if needed to maintain internal and external stability and support macroeconomic growth.
Given these latest developments, the Reserve Bank still maintains its current accommodative monetary policy stance. This is to encourage banks to utilize the excess liquidity in the banking system to lend out to growth sectors in order to support domestic economic activities and growth.
Tu‘utu‘uni ki he Fokotu‘utu‘u 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 18 ‘o Ma’asi 2020, 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 lipooti ‘e he Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, ‘oku fetō’aki ‘a e ngaahi ngāue faka’ekonōmika fakalotofonua´ ‘i he kamata’anga ‘o e ta’u. ‘I he māhina Sanuali 2020, na’e fetō’aki ‘a e ngaahi ola mei he ngāue ‘a e sekitoa ngoue, vaotātā mo e toutai´. Na’e holo ‘a e lahi ‘o e ngoue ‘oku uta atu ki muli ‘i Sanuali, kā ‘i he vakai ki he ta’u´ na’e lahi ange ‘a e ngoue na’e uta atu´ makatu’unga mei he lelei ange ‘a e ola ‘o e tō hina´, talo´, mo e manioke´. Ko e ngaahi fakamatala fakamuimui taha mei he toutai´ na’e hā mei ai ‘oku tupu lahi ‘a e e toutai ‘oku uta atu ki muli´ ‘i he ta’u´ ki Tisema 2019 ‘o tautefito ki hono uta atu ‘o e valu. Na’e hiki hake ‘a hono tuku atu mo e ngāue’aki ‘o e ‘uhila ‘i Sanuali ‘o poupou ki he sekitoa fiema’u faka’api´, mo e ngaahi ngāue faka’ekōnomika´. ‘Oku fakafuofua ‘e kei tokoni pē ‘a e ngaahi polōseki ngaahi hala´ ki he sekitoa keli’anga koloa´ mo e maka´. Na’e holo ‘a e ngaahi koniteina mo e ngaahi me’alele na’e lesisita ‘i he lolotonga ‘o e māhina´ ‘o hā mei ai ‘oku māmālie ange ‘a e ngaahi ngāue ‘i he fefakatau’aki´ mo e ngāue’aki ‘a e koloa´. Na’e holo foki mo e lahi ‘o e pāsese ne tū’uta mai mei muli ki Tonga ni´ ‘o mahino ai ‘oku ‘i ai ‘a e holo ‘i he ola mei he tafa’aki ‘o e ngaahi ngāue´.
‘Oku fakafiemālie pē ‘a e fai fatongia ‘a e ngaahi pangikē, ‘o poupou ki ai ‘a e mālohi fe‘unga á e ivi ‘o ‘enau pa‘anga ngāue´, pehē ki he‘enau ngaahi tupu´ (profits). Na‘e hiki ‘a e lahi ‘o e ngaahi nō ne tuku atu´ ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa‘anga´ (loans/deposit ratio), mei he peseti ‘e 80.7 ki he peseti ‘e 81.1 ‘i ’i he māhina´, ‘o makatu’unga mei´ he lahi ange ‘a e holo ‘o e fakahū pa’anga΄ ‘o fakatatau ki he holo ‘o e ngaahi nō kuo tuku atu´. ‘Oku kei mā’olunga si’i pē eni ‘i he peseti ‘e 80 kuo tu‘utu‘uni ‘e he Pangikē Pule´. Kaekehe, ‘oku kei lahi pē ‘a e hulu ‘i he pa’anga ngāue (liquidity) ‘a e ngaahi pangikē, ‘a ia ‘oku malava ke hokohoko atu pē ‘a hono nō atu ki tu’a´. Na‘e lahi ange ‘a e ‘avalisi ‘a e totongi tupu ‘i he nō mo e fakahū pa’anga´ (weighted average interest rate spread) ‘i he māhina´ ‘aki ‘a e poini peseti ‘e 0.79, kae holo ‘i he ta’u´ ‘aki ‘a e poini peseti ‘e 17.68 ki he peseti ‘e 6.03.
Na‘e holo ‘a e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ‘i Sanuali 2020 ‘aki ‘a e $4.6 miliona ki he $482.9 miliona, fe‘unga mo e māhina ‘e 7.5 ‘o e koloa mo e ngaahi ngāue hū mai mei muli´. Kaekehe, ‘i he lolotonga ‘o e ta’u´ na’e kake ‘a e pa’anga talifaki ‘i muli´ ‘aki ‘a e $3.9 miliona, tupu pea mei´ he lahi ‘a e ngaahi pa’anga hū mai ki he tokoni fakapatiseti ‘a e pule’anga´ mo e pa’anga tokoni ki he ngaahi poloseki´ mei he ngaahi hoa ngaue fakalakalaka´.
Ko e tu’unga ‘o e totongi koloa fakalukufua΄ i he māhina´ na’e holo ‘aki ‘a e peseti ‘e 0.3 makatu’unga mei he holo ‘a e ngaahi totongi koloa fakalotofonua´ ‘aki ‘a e peseti ‘e 0.6, kae tu’uma’u pē ‘a e ngaahi totongi koloa hū mai mei muli΄. ‘I he ta’u΄ ki Sanuali 2020, na’e hiki ‘a e tu’unga ‘o e totongi koloa fakalukufua΄ ’aki ‘a e peseti ‘e 0.6, ‘o fakahoa ki he tupu peseti ‘e 1.2 ‘i Tisema 2019, mo e tupu peseti ‘e 4.2 ‘i Sanuali 2019. Na’e makatu’unga eni mei he holo ‘a e totongi ‘o e ngaahi koloa fakalotofonua´ ‘aki ‘a e peseti ‘e 2.9 ‘o meimei fetamate’aki pē ia mo e hiki ‘a e totongi ‘o e ngaahi koloa hū mai mei muli΄ ‘aki ‘a e peseti ‘e 3.6.
‘Oku ‘amanaki foki ‘e uesia ‘a e ’ekonōmikaˊ tupu mei he mafola fakamamani lahi ‘a e mahaki coronavirus, ‘a ia te ne holoki ‘a e ngaahi ngāue faka’ekonomika fakalotofonuaˊ pea mo e fakamamani lahiˊ foki. Kaekehe, ko e pa‘anga talifaki ‘i mulí´ ‘oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie pē ‘o lahi ange ‘i he mahina ‘e 3 ‘o e koloa fakatau maiˊ. ‘Oku fakafuofua ‘a e hikihiki ‘i he totongi koloaˊ ke ma’ulalo pē he peseti ‘e 5. Ko e ngaahi pangikē ‘oku fakafuofua ‘e fakafiemālie pē mo ‘enau ngaahi ngāue΄.‘Oku tokanga lahi ‘a e Pangikē Pule´ ‘o muimui‘i ofi ‘a e ola ‘o e ngaahi ngāue faka‘ekonōmika΄ mo fakapa’anga΄, mo tu‘u mateuteu ke liliu ‘a e ngaahi fokotu‘utu‘u ngāue fakapa‘anga´ ‘o ka fiema‘u ke tauhi ‘aki hono ma’uma’uluta΄ mo tokoni ki he tupu faka‘ekonōmika΄.
Makatu‘unga pea mei´ he ngaahi fakamatala kuo fakahā atu ‘i ‘olunga´, ‘oku kei tu’uma’u pē ‘a e ngaahi tu‘utu‘uni ngāue fakapa‘anga lolotonga´. ‘Oku taumu’a eni ke faka‘ai‘ai ‘a hono ngāue’aki ‘a e hulu ‘i he pa’anga ngāue ‘a e ngaahi pangikē, ki hono nō atu ki he ngaahi sekitoa fakatupu´ ke tokoni ki he ngaahi ngāue faka’ekonōmika fakalotofonua´, pea ke poupou mo pātoloaki ‘a e tupu faka‘ekonōmika´.
