The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 26th June 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 and to support the economy from the impacts of COVID-19.
- 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%;
- maintain the inflation reference rate at 5%.
- Monitor the commercial banks liquidity and adjust the SRD ratio if needed.
- Monitoring the commercial banks’ capital reserves and adjust further when required.
- Ease the exchange control requirements when required.
- Continue to issue Government Bonds.
- Maintain clear channels of effective communications with the financial institutions for adequate preparedness.
- Continue to be transparent and raise awareness of its monetary policy decisions through press releases to the public.
- Closely monitor the impacts of the pandemic in the financial system for early detection of any signs of vulnerability.
- Continue to ensure both commercial banks and non-bank financial institutions adheres to all Government declarations regarding COVID-19 in the workplace while delivering essential financial services to the public.
The Governor of the Reserve Bank, Sione Ngongo Kioa, reported that the arrival of Tropical Cyclone (TC) Harold in April 2020 coupled with the continuing COVID-19 restrictions has worsened the conditions for the Tongan economy. This was evident in the slow down in primary production for April, with agricultural export volumes falling by 215.7 tonnes (28.7%) due to lower exports of taro and cassava. Projects are further delayed for the industry sector and tourism has come to a standstill affecting many businesses in the tertiary sector.
The banking system, however, continues to remain sound supported by strong capital and adequate profits. The banks’ total loans to deposit ratio increased from 81.0% to 81.3% over the month as deposits decreased more than loans. This is still above the 80% minimum loan to deposit ratio. However, the liquidity in the banking system remains relatively high, indicating that existing capacity is still available for further lending. The weighted average interest rate spread narrowed both over the month and year to April 2020 by 10.86 basis points and 32.27 basis points respectively to 5.84%.
The official foreign reserves increased over the month and year to April 2020 by $17.7 million and by $10.9 million respectively. The rises were mainly driven by the inflow of budget support, grants, and additional funds from donor partners to assist with Tonga’s preparations for COVID-19.
Inflation fell in April 2020 to negative 0.8% due to lower domestic and imported prices which decreased by 1.7% and 0.1% respectively. Annual headline inflation for April 2020 was at 1.3% which is higher than the 0.4% in March 2020 and 0.2% in April 2019. The yearly price increase stemmed solely from imported prices particularly food and transportation. On the other hand, domestic prices fell in the year to April 2020 driven by lower Kava Tonga and electricity prices.
The Reserve Bank’s projection for Tonga’s economy to contract in the current fiscal year remains, due to the negative impacts of COVID-19. However, the foreign reserves is still expected to remain at sufficient levels above the 3 months minimum threshold of import cover. Inflation is also expected to gradually increase yet remain below the 5% reference rate. The banking system is still sound supported by high liquidity. The Reserve Bank continues to be vigilant in closely monitoring its economic and financial indicators and stands ready to adjust its monetary policy settings if needed to maintain internal and external stability and support macroeconomic 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 26 ‘o Sune 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, ke nō atu ki he ngaahi sekitoa fakatupu´ pea mo tokoni’i e ‘ekonōmika ‘a e fonua´ mei he ngaahi uesia ‘o e COIVD-19.
- Ke 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 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.
- 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.
- Muimui’i ofi ‘a e lahi ‘o e pa’anga ngāue ‘a e ngaahi pangikē, pea holoki e peseti ‘oku tu’utu’uni fakalao ke tauhi ‘i he Pangikē Pule´ (SRD) ‘oka fiema’u.
- Vakai’i ‘a e tu’unga ‘oku ‘i ai ‘a e pa’anga tefito ‘a e ngaahi pangikē ke fe’unga, pea liliu ‘a e tu’utu’uni lolotonga´ ‘i ha taimi ‘e fiema’u ai.
- Fakafaingofua’i ‘a e ngaahi tu’utu’uni fekau’aki mo e fetongi pa’anga muli´’i ha taimi ‘e fiema’u ai.
- Hokohoko atu pē ‘a e founga lolotonga ki hono fakatau ‘a e ngaahi pōnite ‘a e Pule’anga´.
- Tauhi ‘a e fetu’utaki vāofi mo e ngaahi kautaha fakapa’anga´ ke fakapapau’i ‘oku nau ‘i ha tu’unga mateuteu fe’unga.
- Hoko atu pē hono faka’ata kitu’a ‘a e ngaahi tu’utu’uni ngāue ‘a e Pangikē Pule´ ‘aki hono fakahā atu ‘i he ngaahi fanongonongo tuku atu ki he kakai ‘o e fonua´.
- Muimui’i ofi ‘a e ngaahi uesia ‘o e mafola fakamāmani lahi ‘a e COVID-19 ‘i he ngaahi ngāue fakapa’anga´ telia ha ngaahi faka’ilonga ‘o ha tu’ulaveangofua.
- Fakapapau’i ‘oku hokohoko atu pē ‘a e talangofua ‘a e ngaahi pangikē mo e ngaahi kautaha fakapa’anga ‘oku ‘ikai ko ha pangikē ki he ngaahi tu’utu’uni Fakapule’anga fekau’aki mo e COVID-19, pea ‘i he taimi tatau ‘oku kei fakahoko pe ‘a e ngaahi ngāue fakapa’anga´ ki he kakai ‘o e fonua´.
Na‘e lipooti ‘e he Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, ‘oku toe holo hifo ‘a e tu’unga faka’ekonōmika´ ‘o Tonga makatu’unga mei he ngaahi uesia ‘o e Saikolone Fakatalopiki mālohi ko Hāloti´ mo e ngaahi fakataputapui ‘i he COVID-19. Na’e hā mahino eni ‘i he māmālie ange ‘a e ngaahi ngāue ‘i he tafa’aki ki he ngoue´, vaotātaa´ mo e toutai´ ‘i ‘Epeleli´, ‘o hangē ko e holo ‘a e ngoue na’e uta atu ki muli´ ‘aki ‘a e toni ‘e 215.7 (peseti ‘e 28.7) makatu’unga mei he si’isi’i ange ‘a e talo mo e manioke na’e uta atu´. ‘Oku lahi foki mo e ngaahi polōseki lalahi kuo toloi ‘a hono fakahoko´, pea kuo ‘ikai ke toe ‘i ai ha ngaahi ngāue ‘a e sekitoa takimamata´, ‘a ia ‘oku ne toe uesia foki ‘a e tokolahi ‘o e ngaahi pisinisi sēvesi kehe´.
Ka neongo ia´, ‘oku kei malu pē ‘a e fai fatongia ‘a e ngaahi pangikē, ‘o poupou ki ai ‘a e mālohi ‘o ‘enau pa‘anga tefito´, pehē ki he‘enau ngaahi tupu´ (profits). Na‘e hiki ‘a e lahi ‘o e ngaahi fakahū pa‘anga´ ne tuku atu´ ‘i hono fakahoa ki he lahi ‘o e ngaahi nō (loans/deposit ratio), mei he peseti ‘e 81.0 ‘i he māhina kuo’osi´ ki he peseti ‘e 81.3. ‘Oku kei mā’olunga 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) ‘i he māhina´ ‘aki ‘a e poini peseti ‘e 10.86, pea ‘i he ta’u´ ‘aki ‘a e poini peseti ‘e 32.27 ki he peseti ‘e 5.84.
Na‘e kake lahi ‘a e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ‘i he mahina ‘aki ‘a e $17.7 miliona, pea ‘i he ta’u ki ‘Epeleli 2020 ‘aki ‘a e $10.9 miliona. Na’e makatu’unga ‘a e kake ko eni mei´ he lahi ‘a e ngaahi pa’anga hū mai ki he tokoni fakapatiseti ‘a e Pule’anga´, pa’anga tokoni ki he ngaahi polōseki´, mo e pa’anga tokoni ki he tu’unga mateuteu ‘a Tonga ki he COVID-19.
Na’e holo ‘a e tu’unga ‘o e totongi koloa fakalūkufua΄ i ‘Epeleli ‘aki ‘a e peseti ‘e 0.8, makatu’unga mei he holo ‘a e ngaahi totongi koloa fakalotofonua´ ‘aki ‘a e peseti ‘e 1.7, mo e ngaahi totongi koloa hū mai mei muli΄ ‘aki ‘a e peseti ‘e 0.1. ‘I he ta’u΄ ki ‘Epeleli 2020, na’e hiki ‘a e tu’unga ‘o e totongi koloa fakalūkufua΄ ’aki ‘a e peseti ‘e 1.3, ‘o ma’olunga ange ‘i he tupu peseti ‘e 0.4 ‘i Ma’asi 2020, mo e tupu peseti ‘e 0.2 ‘i ‘Epeleli 2019. Na’e makatu’unga ‘a e tupu fakata’u´ mei he hiki ‘a e totongi ‘o e ngaahi koloa hū mai mei muli΄, ‘o tautefito ki he koloa me’akai΄ mo e ngaahi sēvesi fefononga’aki΄. ‘I he tafa’aki ‘e taha΄, na’e kei holo pē ‘a e ngaahi totongi koloa fakalotofonua΄ ‘i he ta’u΄ ki ‘Epeleli 2020, tupu mei he holo ‘a e totongi ‘o e Kava Tonga΄ mo e ‘uhila΄.
‘Oku ‘amanaki foki ‘e uesia ‘a e ’ekonōmikaˊ tupu mei he mafola fakamāmani lahi ‘a e COVID-19, ‘a ia ‘e malava ke holo lahi ‘a e tupu faka’ekonōmika ‘a e fonuaˊ ‘i he ta’u fakapa’anga lolotongaˊ. Ka neongo ia, ‘oku fakafuofua ‘e ‘i he tu’unga fakafiemālie pē ‘a e pa‘anga talifaki ‘i mulí´ ‘o lahi ange ‘i he māhina ‘e 3 ‘o e koloa hū maiˊ. ‘Oku fakafuofua ‘e hiki hake mo e ngaahi totongi koloaˊ kā ‘e kei ma’ulalo pē ‘i he peseti ‘e 5. Ko e ngaahi pangikē ‘oku ‘i he tu’unga fakafiemālie pē mo ‘enau ngaahi ngāue΄ pea kei hulu pē mo ‘enau pa’anga ngāue΄. ‘Oku mātu’aki tokanga ‘a e Pangikē Pule´ ki hono muimui‘i ofi ‘a e ola ‘o e ngaahi ngāue faka‘ekonōmika΄ mo fakapa’anga΄, pea mateuteu ke liliu ‘a e ngaahi fokotu‘utu‘u ngāue fakapa‘anga lolotonga´ ‘o ka fiema‘u ke pukepuke ‘aki ‘a e ma’uma’uluta fakalotofonua΄ mo fakatu’apule’anga΄, pea ke tokoni foki ki he tupu faka‘ekonōmika΄.
