The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 25th February 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 picked up during December 2019. The primary sector indicated mixed results during the month. The agricultural export volumes declined again and by 1,979.7 tonnes (68.8%). This was due mainly to lower squash exports. However, the volume exported rose over the year by 2,335.9 tonnes (24.1%). Both proceeds for agricultural and marine exports increased by $0.2 million (40.1%) and $0.2 million (20.6%), respectively. The secondary sector mostly showed positive movements as individual housing and business construction loans increased by $1.1 million (0.5%) and $1.1 million (11.1%) respectively indicating growth in construction activities. This is also supported by higher payments for imports of construction materials which rose by $0.4 million (31.1%). The tertiary sector reported positive movements as the total international air arrivals increased by 2,329 passengers (27.0%) during the month. Container registrations increased by 331 (29.3%) whilst total vehicle registrations rose by 39 registrations (2.8%) due to more registrations of cars and other light vehicles.
The banking system remains sound supported by strong capital and adequate profits. The banks’ total loans to deposit ratio decreased from 81.2% to 80.7% in December 2019, reflecting a greater decline in loans relative to the decline in deposits. This is also just 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 narrowed by 3.6 basis points to 6.03%. The monthly decline was mainly a result of lower housing loan rates.
The official foreign reserves fell by $2.1 million to $487.4 million (equivalent to 7.8 months of imports cover). Over the year, the foreign reserves increased by $8.9 million as a result of higher receipts from budget support, grants, and project funds from development partners.
Inflation rose by 0.2% over the month as domestic prices increased by 0.7% while imported prices fell by 0.3%. The annual headline inflation was at 1.2% for December 2019 compared to 0.1% in November 2019 and 4.8% for December 2018. This resulted from the increase in both imported and domestic prices over the year.
Although there is an expected pick up in domestic economic activity in January 2020, the medium-term outlook on Tonga’s economic performance is now expected to grow at a slower pace due to the impacts of Cyclone Tino on the outer islands. Rising global uncertainties especially with regards to the coronavirus outbreak and bushfires in Australia may also impact Tonga’s tourism and trading sectors. Nevertheless, the level of foreign reserves is still 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 25 ‘o Fepueli 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 ‘i ai ‘a e kake ‘i he ngaahi ngāue faka’ekonōmika fakalotofonua´ ki he māhina Tisema 2019. Ko e ngaahi ola mei he ngāue ‘a e sekitoa ngoue, vaotātā mo e toutai´ na’e fetō’aki ‘i he lolotonga ‘o e māhina´. Na’e toe holo pē foki ‘a e lahi ‘o e ngoue ‘oku uta atu ki muli ´ ‘aki ‘a e toni ‘e 1,979.7 (peseti ‘e 68.8). Na’e makatu’unga ‘a e holo ko ‘eni mei he holo ‘a hono uta atu ‘o e hina´. Ka neongo ia´, na’e lahi ange ‘a e ngoue ‘oku uta atu ki muli ‘i he ta’u´ ‘aki ‘a e toni ‘e 2,335.9 (peseti ‘e 24.1). Na’e hiki fakatou’osi ‘a e pa’anga hū mai mei hono uta atu ki muli ‘a e ngoue´ ‘aki ‘a e $0.2 miliona (peseti ‘e 40.1), mo e pa’anga hū mai mei hono uta atu ki muli ‘a e toutai´ ‘aki ‘a e $0.2 miliona (peseti ‘e 20.6). Na’e lelei ange ‘a e ngaahi ola na’e hā mai mei he sekitoa fakatupu koloa´, tupu mei he lahi ange ‘a e ngaahi nō langa fale taautaha´ ‘aki ‘a e $1.1 miliona (peseti ‘e 0.5), pea mo e nō ‘a e ngaahi pisinisi hange koe ngaahi kautaha langa´ ‘aki ‘a e $1.1 miliona (peseti ‘e 11.1). ‘Oku mahino mai heni ‘a e longomo’ui ange ‘a e ngaahi ngāue ki he tafaáki langa´. ‘Oku toe tokoni foki ki heni mo e lahi ange ‘a e totongi pa’anga ki muli ‘ki hono hu mai a e ngaahi naunau langa´ ‘a ia na’e tupu ‘aki ‘a e $0.4 miliona (peseti ‘e 31.1). Na’e fakalakalaka foki mo e ngaahi ola mei he sekitoa ‘o e ngaahi ngāue´, ‘a ia na’e kake ‘a e tokolahi ‘o e kau folau mei tu’apule’anga ne tū’uta mai ki Tonga´ ni ‘i he māhina´ ‘aki ‘a e kau pāsese ‘e 2,329 (peseti ‘e 27.0). Na’e lahi ange mo e ngaahi koniteina na’e lesisita´ ‘aki ‘a e koniteina ‘e 331 (peseti ‘e 29.3), pea pehē foki ki he tupu ‘a e ngaahi me’alele na’e lesisita´ ‘aki ‘a e me’alele ‘e 39 (peseti ‘e 2.8) ‘o tautefito ki he ngaahi saliote misini uta pasese iiki mo e ngaahi saliote misini uta ma’ama’a.
‘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 holo ‘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 81.2 ki he peseti ‘e 80.7 ‘i Tisema 2019, ‘o makatu’unga mei´ he holo ange ‘a e ngaahi nō kuo tuku atu´ ‘o fakatatau ki he holo ‘o e fakahū pa’anga΄. ‘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 holo ‘a e ‘avalisi ‘a e totongi tupu ‘i he nō mo e fakahū pa’anga´ (weighted average interest rate spread) ki he māhina´ ‘aki ‘a e poini peseti ‘e 3.6 ki he peseti ‘e 6.03. Na’e makatu’unga eni mei he holo ‘a e totongi tupu ‘i he ngaahi nō (lending rates) langa fale taautaha´.
Na‘e holo ‘a e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ‘aki ‘a e $2.1 miliona ki he $487.4 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 $8.9 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 hiki ‘aki ‘a e peseti ‘e 0.2 makatu’unga mei he hiki ‘a e ngaahi totongi koloa fakalotofonua´ ‘aki ‘a e peseti ‘e 0.7, kae holo e ngaahi totongi koloa hū mai mei muli΄ ‘aki ‘a e peseti ‘e 0.3. ‘I he ta’u΄ ki Tisema 2019, na’e hiki ‘a e tu’unga ‘o e totongi koloa fakalukufua΄ ’aki ‘a e peseti ‘e 1.2, ‘o fakahoa ki he tupu peseti ‘e 0.1 ‘i Novema 2019, mo e tupu peseti ‘e 4.8 ‘i Tisema 2018. Na’e makatu’unga eni mei he hiki fakatou’osi ‘a e totongi ‘o e ngaahi koloa hū mai mei muli΄ mo e ngaahi koloa fakalotofonua΄ ‘i he lolotonga ‘o e ta’u΄.
Neongo ‘oku fakafuofua ‘e he Pangikē Pule´ ‘e kake ‘a e ngaahi ngāue faka’ekonomika fakalotofonua´ ‘i he māhina Sanuali 2020, kā ‘e faka’au pē ke māmālie ange ‘a e tupu ‘a e ’ekonōmika ‘o Tonga´ ‘i he kaha’u vave mai´, makatu’unga mei hono uesia ‘e he Saikolone Tino΄ ‘a e ngaahi ‘otumotu΄. ‘Oku ‘amanaki foki ‘e ‘i ai mo e uesia ‘a e ngaahi fetō’aki ‘i he tu’unga faka’ekonōmika fakamamani lahi΄ kae tautefito ki he mafola ‘o e mahaki coronavirus mo e ngaahi vela ‘i ‘Aositelelia ‘i he sekitoa takimamata mo e fefolau’aki ‘a Tonga΄ ni. Ko e pa‘anga talifaki ‘i mulí´ ‘oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie pē, pea ko e hikihiki ‘i he totongi koloaˊ ‘e ma’ulalo pē 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.
