The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 21st January 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 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 slowed towards the end of 2019. This was reflected in lower agricultural exports which decreased in November 2019 by 411.3 tonnes (12.5%) coinciding with lower export proceeds as well as the ending of the squash season. Meanwhile, the industry and tertiary sectors showed mixed growth. Loans for the utility sector and housing purposes increased, whilst lending to the manufacturing sector declined. Container registrations increased by 238 (26.7%) in November 2019, whilst total air arrivals declined by 446 passengers (4.9%) and reflected the lower number of international flights during the month. This aligned with a $1.7 million (13.6%) decrease in travel receipts. Vehicle registrations continued to fall by 47 vehicles (15.9%). The measles outbreak which continued over November 2019 also restricted scheduled functions as they were either cancelled or limited to some extent may have contributed to the domestic slowdown.
The banking system continues to be sound supported by strong capital and adequate profits. The banks’ total loans to deposit ratio rose from 79.1% to 81.2% over November 2019, reflecting loans growing while deposits fell. This is above the 80% minimum loan to deposit ratio. However, the liquidity in the banking system still remains relatively high, indicating that existing capacity is still available for further lending. The weighted average interest rate spread continued to narrow and did so over the month and the year by 1.9 basis points and 9.6 basis points respectively to 6.02%. This was due to lower weighted average lending rates and weighted average deposit rates.
The official foreign reserves rose slightly by $0.2 million to $489.5 million (equivalent to 7.8 months of imports cover), whilst annually, foreign reserves increased by $20.9 million due to higher receipts of budget support, grants, and project funds from development partners.
Inflation during November 2019 declined by 0.5% as a result of lower domestic and imported prices. Both the fall in domestic and imported prices was driven mainly by declining food prices. Annual headline inflation remained low in November 2019 at 0.1% compared to 0.2% in October 2019 and the 6.5% inflation rate in November 2018. This was mostly due to lower domestic prices, offsetting the rise in import prices over the year.
The medium-term outlook on Tonga’s economic performance is now expected to grow at a slower pace, considering the recent economic indicators. However, 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 also 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 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 21 ‘o Sanuali 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 fakahā ‘e he Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, ‘oku māmālie ange ‘a e ngaahi ngāue faka’ekonōmika´ ‘i he ofi ki he faka’osinga ‘o e ta’u 2019. Na’e hā mahino eni ‘i he holo ‘a e uta atu ki muli ‘o e ngoue´ ‘i he māhina ‘o Nōvema 2019 ‘aki ‘a e toni ‘e 411.3 (peseti ‘e 12.5), ‘o fenāpasi eni mo e holo ‘a e pa’anga hū mai mei hono uta atu ki muli ‘a e ngoue´, kae pehē ki he faka‘osinga ko ia ‘o e fa’ahita’u utu ‘o e hina´. Ka neongo ia´, na’e fetō’aki pē ‘a e ola ia ‘o e ngaahi ngāue ‘i he sekitoa fakatupu koloa´ mo e ngaahi ngāue´. Na’e kake hake ‘a e lahi ‘o e ngaahi nō ‘oku tuku atu ki he sekitoa ngaahi fiema’u faka’api´ (utility) mo e langa fale´, ka e holo ‘a e nō ki he ngaahi ngāue fa’u koloa´ (manufacturing). Na’e hiki hake ‘a e lahi ‘o e ngaahi koniteina na’e lesisita´ ‘aki ‘a e koniteina ‘e 238 (peseti ‘e 26.7) ‘i he māhina ‘o Nōvema 2019, kae holo ‘a e tokolahi ‘o e kau folau mei tu’apule’anga ne tū’uta mai ki Tonga´ ni ‘aki ‘a e kau pāsese ‘e 446 (peseti ‘e 4.9), ‘o fakatatau ki he holo ‘a e lahi ‘o e ngaahi vakapuna ne tū’uta mai ki Tongan´ ni he lolotonga ‘o e māhina´. ‘I he taimi tatau, na’e holo hifo mo e pa'anga hū mai mei he kau fefolau’aki´ ‘aki ‘a e $1.7 miliona (peseti ‘e 13.6). Na’e toe holo pē foki ‘a e lahi ‘o e ngaahi me’alele na’e lesisita´ ‘aki ‘a e me’alele ‘e 47 (peseti ‘e 15.9). Makatu’unga pea mei he kei hoko atu pē ‘a e mafola e mahaki misele´ ‘i he māhina Nōvema 2019, na’e fakanounou pē ‘a e ngaahi katoanga lahi ne ‘osi fokotu’utu’u ke fakahoko´ pea kaniseli atu mo e ngaahi katoanga ‘e ni’ihi, ‘o kau pē mo ia ki he holo ‘a e ngaahi ngāue faka’ekonōmika fakalotofonua´.
‘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 79.1 ki he peseti ‘e 81.2 ‘i Nōvema 2019, ‘o makatu’unga mei´ he lahi ange ‘a e ngaahi nō kuo tuku atu´, kae holo ‘o e fakahū pa’anga΄. ‘Oku mā’olunga hake eni ‘i he peseti ‘e 80 kuo tu‘utu‘uni ‘e he Pangikē Pule´. Kaekehe, ‘oku kei toe 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 hokohoko atu pē mo e holo ‘a e ‘avalisi ‘a e totongi tupu ‘i he nō mo e fakahū pa’anga´ (weighted average interest rate spread) ki he he māhina´ ‘aki ‘a e poini ‘e 1.9, mo e ta’u´ ‘aki ‘a e poini ‘e 9.6 ki he peseti ‘e 6.02. Na’e makatu’unga eni mei he holo ‘a e totongi tupu ‘i he nō (lending rates) mo e totongi tupu ‘i he fakahū pa‘anga´ (deposit rates).
Na‘e kake si’i hake ‘a e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ‘aki ‘a e $0.2 miliona ki he $489.5 miliona (fe‘unga mo e māhina ‘e 7.8 ‘o e koloa mo e ngaahi ngāue hū mai mei muli). ‘I he lolotonga ‘o e ta’u´, na’e kake ‘a e pa’anga talifaki ‘i muli´ ‘aki ‘a e $20.9 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´.
Na‘e holo ‘a e tu’unga ‘o e totongi koloa fakalukufua΄ ‘i Nōvema 2019 ‘aki ‘a e peseti ‘e 0.5 makatu’unga mei he holo fakatou’osi ‘a e ngaahi totongi koloa fakalotofonua´ mo e ngaahi totongi koloa hū mai mei muli΄. Ko e holo ‘i he totongi koloa fakalotofonua´ mo e koloa hū mai´ na’e lahilahi pē ki he koloa me’akai΄. ‘I he vakai ki he tu’unga fakata’u΄, ‘oku kei ma’ulalo pē ‘a e tu’unga hikihiki ‘o e totongi koloa΄ ‘i Nōvema 2019 ’a ia na’e tupu peseti ‘e 0.1, ‘o fakahoa ki he tupu peseti ‘e 0.2 ‘i ‘Okatopa 2019, mo e tupu peseti ‘e 6.5 ‘i Nōvema 2018. Ko e tu’unga ma’ulalo ko eni΄ ‘oku tupu ia mei he holo ‘a e ngaahi totongi koloa fakalotofonua΄ neongo ‘a e hiki ‘a e totongi ‘o e ngaahi koloa hū mai mei muli΄.
‘Oku fakafuofua ‘e he Pangikē Pule´ ‘e māmālie ange ‘a e tu’unga faka’ekonōmika ‘a e fonua´ ‘i he kaha’u vave mai´ makatu’unga ‘i he ngaahi fakamatala fakamuimuitaha ‘oku ne tānaki΄. Kaekehe, ‘e malava 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 peseti ‘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 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.
