The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 28th October 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.
- 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 experienced mixed growth in August 2019. Agricultural exports decreased in August due to lower exports of root crops. However, the inflow of agricultural and marine export proceeds increased, and export proceeds are expected to rise in the upcoming months as harvesting of squash for exports continues. Activities within the secondary sector such as construction remain strong on the commencement of the reconstruction of schools, as well as the construction of church buildings and private individual houses. This is in-line with an increase in housing as well as construction sector loans. On the other hand, the services sector indicators were mixed with international air arrivals slowing in August while container registrations increased. Vehicle registrations fell over the month.
The banking system continues to be sound supported by strong capital and adequate profits. The banks’ total loans to deposit ratio slightly rose from 78.4% to 79.0% over the month, reflecting loans increasing at a faster pace than the increase in deposits. Given that this is very close to the 80% minimum loan to deposit ratio, the liquidity in the banking system remains fairly high indicating existing capacity is still available for further lending. The weighted average interest rate spread widened to 6.11%. This is due to an increase in weighted average lending rates, offsetting the decline in weighted average deposit rates.
Official foreign reserves decreased by $1.1 million to $491.8 million (equivalent to 8.1 months of imports cover) in August 2019 and is attributed to higher oil and other import payments.
The annual headline inflation continued to be subdued, Tonga recorded deflation of 0.1% in August, compared to inflation of 6.1% last year. The yearly deflation was due largely to a fall in domestic prices by 2.5%, particularly for kava Tonga and local food items. The cheaper local food prices reflect a recovery of crops and vegetables from the impacts of Tropical Cyclone Gita last year. On the other hand, imported prices increased by 1.9% on the increase in imported prices except for transport, reflecting lower fuel prices.
The medium-term outlook on Tonga’s economic performance remains positive, yet 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 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 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 28 ‘o ‘Okatopa 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´.
- 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 fetō’aki pē ‘a e tupu e ngaahi ngāue faka‘ekonōmika fakalotofonua´ ‘i he māhina ‘Aokosi 2019. Na‘e holo ‘a e lahi e ngoue ‘oku uta atu ki muli ‘i he māhina ‘Aokosi´, ‘o tautefito ki he ngaahi ngoue me’akai foha´. Ka neongo ia´, na’e kei lahi ange pē ‘a e pa’anga fakakātoa ‘oku hū mai mei hono fakatau atu ki muli ‘a e ngoue´ mo e koloa toutai´, pea ‘oku ‘amanaki ke toe tupu lahi ange ‘i he ngaahi māhina ka hoko mai´ ‘i hono kamata toli ‘o e hina´ ke uta atu ki tu’apule’anga´. ‘Oku kei tupu mālohi pē ‘a e ngaahi ngāue ‘i he sekitoa fakatupu koloa´ ‘o hangē ko e ngaahi ngāue langa´, ‘o tautefito ki hono langa ‘o e ngaahi faleako´, ngaahi falelotu´, mo e ngaahi fale taautaha´. ‘Oku hā mahino pē eni ‘i he kake ‘a e ngaahi nō fale´ mo e nō ki he sekitoa langa´. Kaekehe, na’e fetō’aki ‘a e tupu ‘i he tafa’aki ‘o e ngaahi ngāue´, ‘a ia na’e holo ‘a e tokolahi ‘o e kau folau mei tu’apule’anga ne tū’uta mai ki Tonga´ ni ‘i ‘Aokosi´, kae lahi ange ‘a e ngaahi koniteina na’e lesisita´. Na’e holo foki mo e lahi ‘o e ngaahi me’alele na’e lesisita he māhina´.
‘Oku kei ‘i he tu‘unga fakafiemālie pē ‘a e fai fatongia ‘a e ngaahi pangikē fakakomēsiale´, ‘o poupou ki ai ‘a e mālohi fe‘unga e ivi ‘enau pa‘anga ngāue´, pehē ki he‘enau ngaahi tupu´ (profits). Na‘e tupu ‘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), ki he peseti ‘e 79.0 mei he peseti ‘e 78.4 ‘i he māhina kuo ‘osi΄, ‘o makatu’unga mei he lahi ange ‘a e tupu ‘o e ngaahi nō kuo tuku atu´, ‘i he tupu ‘o e fakahū pa’anga΄. Neongo kuo ofi eni ‘i he peseti ‘e 80 kuo tu‘utu‘uni ‘e he Pangikē Pule´, kā ‘oku mahino mai ‘oku kei toe lahi pē ‘a e hulu ‘i he pa’anga ngāue (liquidity) ‘a e ngaahi pangikē ‘a ia ‘oku malava ke kei nō atu ki tu’a´. Na‘e hiki ‘a e ‘avalisi ‘o e totongi tupu´ ‘i he nō mo e fakahū pa’anga´ (weighted average interest rate spread) ki he peseti ‘e 6.11. Na’e makatu’unga eni mei he kake ‘a e totongi tupu ‘i he nō (lending rates) kae holo ‘a e totongi tupu ‘i he fakahū pa‘anga´ (deposit rates). Na‘e holo hifo ‘a e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ‘aki ‘a e $1.1 miliona ki he $491.8 miliona (fe‘unga mo e māhina ‘e 8.1 ‘o e koloa mo e ngaahi ngāue hū mai mei muliˊ) ‘i ‘Aokosi 2019. Na‘e makatu‘unga ‘a e holo ko eni΄ mei he lahi ange ‘a e ngaahi totongi ki he lolo΄ mo e koloa hū mai mei muli΄. Na‘e holo ‘a e tu’unga ‘o e totongi koloa fakalukufua΄ ‘i ‘Aokosi΄ ‘aki ‘a e peseti ‘e 0.1, ‘o fakahoa ki he hiki peseti ‘e 6.1 ‘i he māhina tatau he ta’u kuo’osi΄. Ko e holo fakata’u ko eni΄ na’e tupu ia pea mei he holo ‘a e ngaahi totongi koloa fakalotofonua΄ ‘aki ‘a e peseti ‘e 2.5, tautefito ki he totongi ‘o e kava Tonga΄ mo e me’akai fakalotofonua΄. ‘Oku hā mai ‘i he ma’ama’a ange ‘a e totongi ‘o e me’akai fakalotofonua΄ ‘a e fakaakeake ‘a e me’akai Tonga΄ mo e vesitapolo΄ mei hono uesia ‘e he Saikolone Fakatolopiki ko Gita he ta’u kuo ‘osi. Kaekehe, na’e kei hikihiki pē ‘a e totongi koloa hū mai mei muli΄ ‘aki ‘a e peseti ‘e 1.9 ki he kotoa ‘o e ngaahi koloa hū mai΄, tukukehe ‘a e ngaahi koloa fefonga’aki΄ tupu mei he holo ‘a e totongi lolo΄.
‘Oku fakafuofua ‘e he Pangikē Pule´ ‘oku fakalakalaka pē kimu’a ‘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 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 ‘e nofo pē ‘a e hikihiki ‘i he totongi koloaˊ ‘o ‘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 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 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.
