The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 19th July 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.

  1. maintain the monetary policy rate at 0% (zero interest rate policy);
  2. maintain the minimum loans/deposit ratio of 80%;
  3. maintain the Statutory Reserve Deposit ratio at 10%, and
  4. maintain the inflation reference rate at 5%.

The Governor of the Reserve Bank, Sione Ngongo Kioa, reported that domestic activities experienced mixed performance in the month of May 2019. Partial economic data pointed to mixed sectoral performance in the primary sector. Receipts from exports of agricultural products rose during the month while proceeds from marine products slightly fell. Growth in lending to the agricultural sector increased by 10.4% in May and is expected to support the sector’s growth in the medium term. Additionally, growth in lending to the manufacturing, construction and the utility sectors in May suggest positive activities in the industry sector. Individual housing loans continued to rise while payments for imports of construction materials also rose in May, further supporting the positive outlook for the construction sector. Total air arrivals rose by 30.5% over the month coinciding with the rise in the number of international flights landing in Tonga. Consequently, travel receipts also increased by 40.9% ($3.5 million). Payments for imports of wholesale and retail goods also rose by 31.4% supporting the trade sector. However, the total number of container registrations decreased by 1.0% (8 containers) as lower number of business containers outweighed the increase in private containers.

The banking system remained sound as banks continued to maintain a strong capital position backed by adequate profits. The banks’ total loans to deposit ratio increased over the month to 78.7% from 77.5% in the previous month. The monthly rise in the ratio reflects higher loans which increased to a new high of $487.3 million against declining deposits. This ratio is slowly increasing towards the 80% minimum loan to deposit ratio, as commercial banks continue to utilize the capacity available for further lending. The weighted average interest rate spread narrowed in May driven by a decline in weighted average lending rates offsetting the slight rise in weighted average deposit rates.

Foreign reserves rose in May 2019 by $4.1 million to $468.3 million equivalent to 7.9 months of imports cover which was mainly driven by receipts of government grants and budget support.

The annual headline inflation remained below the 5% reference rate in May, at 1.6% compared to 0.2% in April 2019 and 3.8% in the same month last year. Both domestic and imported prices rose over the year to May 2019 by 1.5% and 1.7% respectively. Domestic inflation contributed 0.7% to the annual headline inflation as higher prices were noted for tobacco, food, and restaurant services. Imported inflation contributed 0.9% to the annual headline inflation due to higher prices of imported tobacco, alcohol, and fuel.

Tonga’s economic performance continues to remain positive in the medium term. However, weather uncertainty and global oil price movements pose a risk to the outlook. 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.

In consideration of the above developments and outlook, the current accommodative 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. 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.

+ - Press Release in Tongan Click to collapse

Tu'utu'uni Ngaue 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 19 ‘o Siulai 2019, 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, 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´.

  1. Ke kei hoko atu pē hono ta’etotongi ha 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);
  2. 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);
  3. Ke kei tauhi 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
  4. Ke tu‘uma’u pē ‘a e tu‘unga ‘o e hikihiki ‘i he totongi ‘o e ngaahi koloa´ (inflation reference rate) ‘i he peseti ‘e 5.

Na‘e fakahā ‘e he Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, na‘e mei fetō‘aki pē ‘a e ngaahi ngāue faka‘ekonōmika ‘a e fonua´ ‘i he māhina ‘o Mē 2019. Na‘e hā mai eni he konga ‘o e ngaahi fakamatala kuo ma‘u mai fekau’aki mo e sekitoa ki he ngoue΄, toutai΄ pea mo e vao‘akau΄. Na‘e lahi ange ‘a e pa‘anga hū mai mei hono uta atu ‘o e ngoue΄ ki tu‘apule‘anga΄, ka e holo si‘i ‘a e pa‘anga hū mai mei hono uta atu ‘o e koloa toutai΄. Ko e nō ki he sekitoa ngoue΄ ne hiki hake ‘aki ‘a e peseti ‘e 10.4 ‘i Mē, ‘a ia ‘e malava tokoni eni ki he tupu ‘a e sekitoa΄ ‘i he kaha‘u vave mai΄. ‘Oku kei tupu pē foki mo e nō ki he sekitoa fa‘ukoloa΄, langa΄ pea mo e ngaahi fiema‘u faka‘api΄ (utility) ‘i Mē, ‘a ia ‘e tokoni eni ki he tupu ‘a e sekitoa fakatupu koloa΄ (industry sector). ‘Oku kau atu foki mo e tupu ‘a e ngaahi nō ki he langa fale taautaha΄, pehē ki he lahi ange mo e totongi pa‘anga ki hono hū mai e naunau langa mei muli΄, ‘i he poupou ki he longomo’ui ange ‘a e sekitoa fakatupu koloa΄. Ko e tokolahi ‘o e kakai na‘e tū‘uta vakapuna mai ki Tonga΄ni na’e hiki ‘aki ‘a e peseti ‘e 30.5, ‘o fenāpasi ia mo e lahi ange ‘a e ngaahi vakapuna folau fakavaha‘apule‘anga ‘oku tū‘uta mai΄. ‘I he’ene pehē, ne kake hake mo e pa‘anga hū mai mei he folau ‘eve‘eva΄ ‘aki ‘a e peseti ‘e 40.9 ($3.5 miliona). Ko e lahi ‘o e totongi pa‘anga ki muli ki hono hū mai ‘o e ngaahi koloa fefakatau‘aki fakamovetevete΄, na’e tupu mo ia ‘aki ‘a e peseti ‘e 31.4 ‘a ia ‘e tokoni ia ki he sekitoa fefakatau‘aki΄. Ka neongo ia΄, na‘e holo ‘aki e peseti ‘e 1.0 (koniteina ‘e 8) ‘a e ngaahi koniteina na‘e lesisita΄, makatu‘unga mei he holo ‘a e ngaahi koniteina fakapisinisi΄ ‘i hono fakahoa ki he hiki hake ‘a e ngaahi koniteina fakataautaha΄.

‘Oku kei ‘i he tu‘unga fakafiemālie pē ‘a e fai fatongia ‘a e ngaahi pangikē fakakomēsiale´, ‘a ia ‘oku kei hokohoko atu pē ‘a e kei mālohi fe’unga pē ‘a e ivi ‘enau pa’anga ngāue´ pehē ki he‘enau ngaahi tupu´ (profits). Na‘e hiki hake ‘a e pēseti ‘o e ngaahi nō ne tuku atu´ ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa‘anga´ (loans/deposit ratio) mei he pēseti ‘e 77.5 ‘i he mahina kuo ‘osi΄, ki he pēseti ‘e 78.7 ‘i Mē 2019. Na‘e makatu’unga eni mei he lahi ange ‘a e ngaahi nō fakalukufua ne tuku atu´, ‘a ia ne a‘u ki he tu‘unga ma‘olunga ko e pa‘anga ‘e $487.3 miliona, ‘i hono fakahoa ki he holo ‘a e fakahū pa’anga´. ‘Oku nga‘unu māmālie pe ‘a e fika ko‘eni΄ ki he peseti ‘e 80 kuo tu‘utu‘uni‘i ‘e he Pangikē Pule´ ke a‘usia ‘e he ngaahi pangikē fakakomēsiale´, ‘o hā mahino mei ai ‘a hono faka‘aonga‘i ‘a e faingamālie ‘oku ma’u´ ke toe lahiange ‘a e ngaahi nō ‘oku tuku atu΄. Na‘e holo e ‘avalisi ‘o e totongi tupu ‘i he nō mo e fakahū pa’anga´ (weighted average interest rate spread) ‘i Mē, tupu pea meiˊ he lahiange ‘a e holo ‘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 ‘i he fakahū pa‘anga´ (weighted average deposit rate).

Na‘e hiki hake ‘a e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ‘aki ‘a e $4.1 miliona ki he $468.3 miliona ‘i Mē, ‘o fe‘unga ia mo e māhina ‘e 7.9 ‘o e koloa mo e ngaahi ngāue hū mai mei muliˊ. Na‘e makatu‘unga ‘a e hiki ko eni΄ mei he ma’u mai ‘o e ngaahi pa‘anga tokoni ki he patiseti mo e ngaahi tokoni kehe pē ki he pule‘anga΄.

Na‘e ma‘ulalo pē ‘i he peseti ‘e 5 ‘a e hikihiki fakata‘u ‘i he totongi ‘o e koloa fakalukufua΄, ‘a ia na’e peseti ‘e 1.6 ‘i Mē, fakahoa ki he peseti ‘e 0.2 ‘i ‘Epeleli 2019, pea mo e peseti ‘e 3.8 ‘i Mē 2018. Na‘e hiki fakatou‘osi ‘a e hikihiki fakata‘u ‘i he totongi koloa fakalotofonua΄ ‘aki ‘a e peseti ‘e 1.5, kae hiki peseti ‘e 1.7 ‘a e totongi koloa mei muli΄. Na‘e tokoni fakapoini peseti ‘e 0.7 ‘a e hikihiki ‘i he totongi koloa fakalotofonua ki he totongi koloa fakalukufua΄, ‘o makatu‘unga mei he hiki ‘a e totongi ‘o e tapaka, me‘akai΄ pea mo e totongi ‘o e ngaahi falekai΄. Na‘e tokoni fakapoini peseti ‘e 0.9 ‘a e hikihiki ‘i he totongi koloa mei muli΄ ki he totongi koloa fakalukufua΄, ‘aki ‘a e hiki e totongi ‘o e tapaka΄, kava malohi΄ pea mo e totongi lolo΄.

‘Oku fakafuofua ‘e he Pangikē Pule´ ‘e kei tupu pē ‘a e tu’unga faka’ekonōmika ‘a e fonua´ ‘i he kaha’u vave mai´. Kā ‘e malava uesia ‘a e fakafuofua ko ‘eni´ mei he ngaahi feliuliuaki ‘i he tu’unga ‘o e ‘ea´ pea mo e ngaahi fe‘unu‘aki ‘i he totongi fakamamani lahi ‘o e lolo΄. Ko e pa‘anga talifaki ‘i mulí´ ‘oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie pē, pea ‘oku ‘amanaki ‘e nofo pē ‘a e hikihiki ‘i he totongi koloaˊ ‘o ‘ikai ma’olunga ange he pēseti ‘e 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 te ne 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 aipe ‘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.