The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 29th May 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.

  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%;
  4. maintain the inflation reference rate at 5%.
  5. Monitor the commercial banks liquidity and adjust the SRD ratio if needed.
  6. Monitoring the commercial banks’ capital reserves and adjust further when required.
  7. Ease the exchange control requirements when required.
  8. Continue to issue Government Bonds.
  9. Maintain clear channels of effective communications with the financial institutions for adequate preparedness.
  10. Continue to be transparent and raise awareness of its monetary policy decisions through press releases to the public.
  11. Closely monitor the impacts of the pandemic in the financial system for early detection of any signs of vulnerability.
  12. 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, stated that the Tongan economy continued to generally show a slower performance on the back of fewer activities evident in the secondary and tertiary sectors. This resulting to COVID-19 restrictions on the tourism, travel, trade and employment areas. However, the agricultural exports volumes reflected an increase in March 2020.

The banking system continued to remain sound supported by strong capital and adequate profits. The banks’ total loans to deposit ratio fell from 82.2% in the previous month to 81.0% in March 2020. This, however, is still above the 80% minimum loan to deposit ratio. Nevertheless, 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 by 4.2 basis points over the month and 28.4 basis points over the year to 5.94%.

The official foreign reserves declined significantly in March 2020 by $22.4 million to $457.5 million and equivalent to 6.8 months of imports. Further, the foreign reserves decreased by $7.5 million over the year and was largely due to higher payments for offshore investments, loan repayments, and imports of goods and services.

Inflation rose by 0.2% over the month due to rises in both imported and domestic prices. Annual inflation recorded an increase of 0.4% compared to 0.8% in February 2020 and 2.0% in March 2019. Higher prices in the year resulted mainly to higher imported prices for food, transportation, and alcoholic beverages.

The Reserve Bank projects that the negative impacts of COVID-19 on the Tongan economy will eventuate to a contraction in economic growth for the current fiscal year. However, the foreign reserves is still expected to remain at sufficient levels above the 3 months minimum threshold of imports cover. Inflation is also expected to increase but still remain below the 5% reference rate. The banking system is still sound with high liquidity. The Reserve Bank continues to be vigilant by 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.

 

+ - Press Release in Tongan Click to collapse

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 29 ‘o Mē 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.

  1. 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).
  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 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.
  4. 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.
  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.
  6. 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.
  7. Fakafaingofua’i ‘a e ngaahi tu’utu’uni fekau’aki mo e fetongi pa’anga muli´’i ha taimi ‘e fiema’u ai.
  8. Hokohoko atu pē ‘a e founga lolotonga ki hono fakatau ‘a e ngaahi pōnite ‘a e Pule’anga´.
  9. Tauhi ‘a e fetu’utaki vāofi mo e ngaahi kautaha fakapa’anga´ ke fakapapau’i ‘oku nau ‘i ha tu’unga mateuteu fe’unga.
  10. 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´.
  11. 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.
  12. 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 hokohoko atu pē ‘a e māmālie ange ‘a e ngaahi ngāue faka’ekonōmika´ makatu’unga ‘i he si’isi’i ange ‘a e ngaahi ngāue ‘oku lava fakahoko ‘i he sekitoa fakatupu koloa´ mo e ngaahi ngāue. ‘Oku tupu eni mei hono uesia ‘e he COVID-19 ‘a e ngaahi ngāue fakatakimamata´, fefolau’aki´, fefakatau’aki´ mo e ma’u ngaue´. Ka neongo ia, na’e ‘i ai e kake ‘i he lahi ‘o e ngoue na’e uta atu ki muli´ ‘i Ma’asi 2020.

‘Oku fakafiemālie 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 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 82.2 ‘i he māhina kuo’osi´ ki he peseti ‘e 81.0 ’i Ma’asi 2020. ‘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) ‘i he māhina´ ‘aki ‘a e poini peseti ‘e 4.2, pea ‘i he ta’u´ ‘aki ‘a e poini peseti ‘e 28.4 ki he peseti ‘e 5.94.

Na‘e holo lahi ‘a e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ‘i Ma’asi 2020 ‘aki ‘a e $22.4 miliona ki he $457.5miliona, ‘o fe‘unga mo e māhina ‘e 6.8 ‘o e koloa mo e ngaahi ngāue hū mai mei muli´. Na’e toe holo pē foki ‘i he lolotonga ‘o e ta’u´ ‘aki ‘a e $7.5 miliona, tupu pea mei´ he lahi ‘a e ngaahi pa’anga ‘oku ‘inivesi ‘i tu’a pule’anga´ (offshore investments), totongi fakafoki ‘a e ngaahi nō, mo e totongi pa’anga ki he ngaahi koloa mo e sevesi hū mai´.

Ko e tu’unga ‘o e totongi koloa fakalūkufua΄ i he māhina´ na’e hiki ‘aki ‘a e peseti ‘e 0.2 makatu’unga mei he hiki fakatou’osi ‘a e ngaahi totongi koloa hū mai mei muli΄ mo e totongi koloa fakalotofonua´. ‘I he ta’u΄, na’e hiki ‘a e tu’unga ‘o e totongi koloa fakalūkufua΄ ’aki ‘a e peseti ‘e 0.4, ‘o fakahoa ki he tupu peseti ‘e 0.8 ‘i Fepueli 2020, mo e tupu peseti ‘e 2.0 ‘i Ma’asi 2019. Na’e makatu’unga eni mei he hiki ‘a e totongi ‘o e ngaahi koloa hū mai mei muli΄, ‘o tautefito ki he hiki ‘a e totongi ‘o e me’akai΄, lolo΄, mo e kava malohi΄.

‘Oku ‘amanaki foki ‘e uesia ‘a e ’ekonōmikaˊ tupu mei he mafola fakamāmani lahi ‘a e COVID-19, ‘a ia ‘e malava ke holo ai ‘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΄.