The National Reserve Bank of Tonga’s board of directors at its meeting on the 30th October 2017 approved to maintain its current monetary policy measures outlined below. This is to encourage utilisation of the excess liquidity in the banking system, through further lending, particularly to the growth sectors, 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% effective in July 2017; and
- maintain the inflation reference rate at 5%.
The Governor of the Reserve Bank, Sione Ngongo Kioa, reported that the local economic activities were vibrant over the month of August. Total agricultural export volumes rose by 335.4 tonnes, reflecting the commencement of the squash season and higher export of cassava. This was supported by a 7.1% growth in lending to agricultural sector. On-going construction activities continued to boost performance in the secondary sector, supported by a 0.7 million KwH rise in electricity consumption. Increase in business loans for manufacturing also support this sector’s expansion. The number of air arrivals rose by 527 passengers benefitting the activities in the tourism sector. The total number of container registrations increased by 377 registrations and 374 vehicles were registered in August, 46.4% and 34.1% higher than the previous month respectively. This echoed an active trade sector and spillover effects to the transportation sector.
The banking system remained sound maintaining strong capital position, supported by comfortable profitability, and non-performing loans continued to remain low. Despite the rise in Statutory Required Deposit from 5% to 10% last month, liquidity in the banking system (reserve money) increased over August to $282.9 million. This was due to higher deposits which largely resulted from receipt of funds for the sale of shares in Tonga Cable Limited. The banks’ total loans to deposit ratio slightly fell in August to 75.2% from 76.3% last month, due to an $18.6 million (3.5%) increase in deposits outweighing a credit growth of $8.5 million (2.1%). This ratio continues to remain below the 80% loan to deposit ratio target which indicates excess liquidity in the banking system remains and that there is capacity for further lending by banks. The weighted average interest rate spread widened slightly to 5.680% over August. This was a result of the decline in the weighted average deposit rate outweighing the decline in the weighted average lending rate.
The foreign reserves however declined by $3.9 million to $405.0 million in August 2017 due to the deficit in the overall overseas exchange transaction balance which was largely attributed to higher import payments. This is equivalent to 6.9 months of import cover, which is still above the Reserve Bank’s minimum range of 3 – 4 months.
The annual headline inflation slowed further to 5.2% in August 2017, slightly higher than the Reserve Bank’s reference rate of 5%. Imported food prices drove the annual inflation rate for items such as mutton flaps, butter, sugar, Winfield blue and alcohol. The revised excise duties on certain products that was introduced last month contributed to the rise in imported prices. The short supply of kava-Tonga, seasonality in local produce and higher electricity prices over the year drove the inflation on domestic goods.
The Reserve Bank’s outlook for strong domestic economic activity remains in the medium term. The level of foreign reserves is also expected to remain at comfortable levels supported by expected higher receipts of remittances and foreign aid. This will be partially offset by the projected rise in imports. Upward inflationary pressure remains in the near term, however it is expected to fall below the Reserve Bank’s inflation reference rate of 5% per annum in 2017/18. The adverse weather conditions and higher import prices poses a risk to these favorable projections.
The Governor concluded that the Reserve Bank will continue to closely monitor developments in the domestic and global economy and update its monetary policy setting, to maintain internal and external monetary stability, and to promote a sound and efficient financial system in order to support macroeconomic stability and economic growth.
The Reserve Bank will also remain vigilant and continue to closely monitor developments for early signs of vulnerabilities which may indicate overheating of the economy.
Tu’utu’uni ki he Fokotu’utu’u Ngāue Fakapa’anga
Na’e tali ‘e he Poate ‘a e kau Talēkita ‘a e Pangikē Pule Fakafonua ‘o Tonga´ hili ‘enau fakataha he ‘aho 30 ‘o ‘Okatopa 2017, 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, ‘o fakafou mai ‘i 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 pe hono ta’etotongi tupu ‘a e pa’anga ngāue ‘a e ngaahi pangiké (Exchange Settlement Account) ‘oku fakahū ‘i he Pangikē Pulé;
- Ke ‘oua e toe ma’ulalo hifo he pēseti ‘e 80 ‘o e lahi e ngaahi nō ‘oku tukuatu ‘ehe ngaahi pangike ‘o fakahoa ki he lahi ‘o ‘enau ngaahi fakahū pa’angá (loan/deposit ratio);
- Ke hiki hake e lahi ‘o e pa’anga ‘a e ngaahi pangiké fakakomesiale, ‘oku tu’utu’uni fakalao ke tauhi ‘i he Pangikē Pulé (Statutory Reserve Deposit) ‘i he pēseti ‘e 10 ‘o kamata ‘i Siulai 2017; pea
- Ke tu’uma’u pē ‘a e fakaámu ki he hikihiki e totongi ‘o e ngaahi koloá ‘i he pēseti ‘e 5 ‘i he ta’u.
Na’e fakahā ‘e he Kōvana ‘o e Pangikē Pule´, Sione Ngongo Kioa, na’e longomo’ui ‘a e ngaahi ngāue faka’ekonōmika fakalotofonua´ ‘i ‘Aokosi. Na’e kake ‘a hono uta atu e ngoue ki muli´ ‘aki ‘a e toni ‘e 335.4, ‘o hā mai ai ‘a e kamata ‘a e to’u hina´ pea pehee ki he toe lelei ange ‘a hono hū atu ‘a e manioke´. Na’e toe tokoni foki mo e tupu peseti ‘e 7.1 ‘a e nō ki he ngoue´ ki he tupu ‘i he sekitoa ngoue´. ‘Oku tokoni ‘a e ngaahi ngāue langa ‘oku lolotonga fakahoko´ ki he tupu ‘a e ngaahi ngāue ‘i he sekitoa ‘o e fakatupu koloa´ (secondary sector), ‘o hā mai ‘i he tupu 0.7 miliona KwH ‘a hono ngāue’aki ‘o e ‘uhila´ (electricity consumption). Na’e toe tokoni foki ki he tupu ‘i he sekitoa ko ‘eni´ ‘a e tupu ‘i he nō ki he sekitoa fa’u koloa (manufacturing). Na’e kake peseti ‘e 46.4 ‘a e tokolahi ‘o e tu’uta mai ki Tonga ni mei tu’apule’anga´ ‘aki ‘a e pasese ‘e 527, ‘o kaunga lelei eni ki he ngaahi ngāue ‘i he sekitoa takimamata. Na’e lesisita ‘a e saliote misini ‘e 377 ‘i ‘Aokosi, ‘a ia ko e tupu peseti ‘e 34.1 eni mei he mahina kuo’osi´. ‘Oku ho’ata mei heni ‘a e longomo’ui ‘a e sekitoa fefakatau’aki´ (trade sector) ‘i he lolotonga ‘o e māhina´, kae’uma’ā ‘ene kaunga lelei ki he sekitoa fefononga’aki (transportation sector).
‘Oku kei ‘i he tu’unga lelei ‘aupito ‘a e fai fatongia ‘a e ngaahi pangikē fakakomēsiale´, ‘o makatu’unga mei he tu’unga fakafiemālie ‘a ‘enau tu’unga tupu´ (profitability) pea pehē ki he kei ‘i he tu’unga mā’ulalo ai pē ‘a e ngaahi nō ‘oku palopalema´. Neongo ‘a e hiki ‘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) ki he peseti ‘e 10 ‘i he mahina kuo’osi, na’e kei tupu pe ‘a e pa’anga ngāue (liquidity) ‘a e ngaahi pangikē ki he $282.9 miliona ‘i ‘Aokosi. ‘Oku makatu’unga eni mei he tupu ‘a e fakahū pa’anga, ‘a ia na’e kau ki heni ‘a e hū mai ‘a e pa’anga ne fakatau ‘aki e ‘inasi (shares) ‘i he taha ‘o e ngaahi kautaha fakalotofonua (Tonga Cable Limited). Na’e holo si’i ‘a e lahi ‘o e ngaahi nō ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa’anga´ (loans/deposit ratio) mei he peseti ‘e 76.3 ‘i he māhina kuo’osi´ ki he peseti ‘e 75.2 ‘i ‘Aokosi. Na’e makatu’unga eni mei he tupu $18.6 miliona (3.5%) ‘a e ngaahi fakahū pa’anga´, ‘o lahi ange ‘i he tupu $8.5 miliona (2.1%) ‘i he ngaahi nō. ‘Oku kei ma’ulalo pē ‘eni ‘i he tu’unga kuo tu’utu’uni ‘e he Pangikē Pule´ ke a’usia ‘e he ngaahi pangikē, ‘a ia ko e peseti ‘e 80. ‘Oku hā mahino mei heni ‘a e kei ‘i ai pē ‘a e faingamālie ke toe fakalahi ‘a e ngaahi nō ke tuku atu ‘e he ngaahi pangikē. Na’e ‘alu hake ‘a e hulu ‘i he ‘avalisi ‘o e totongi tupu ‘i he nō mo e ‘avalisi ‘o e totongi tupu ‘i he fakahū pa’anga´ (weighted average interest rate spread) ‘i ‘Aokosi. Na’e makatu’unga eni mei he holo ‘a e ‘avalisi ‘o e totongi tupu ‘i he fakahū pa’anga´ (weighted average deposit rate) ‘i hono fakahoa ki he tupu ‘i he ‘avalisi ‘o e totongi tupu ‘i he nō (weighted average lending rate).
Na’e holo ‘a e pa’anga talifaki ‘i muli´ (foreign reserves) ‘aki ‘a e $3.9 miliona ki he $405.0 miliona ‘i ‘Aokosi 2017. Na’e makatu’unga eni mei he fe’amokaki ‘i he palanisi ‘o e fehū’aki pa’anga mo muli´, ‘a ia na’e lahi ange ‘a hono totongi ‘o e hū mai ‘o e ngaahi koloa mei muli´. ‘Oku fe’unga ‘a e tu’unga lolotonga ‘o e pa’anga talifaki´ pea mo e māhina ‘e 6.9 ‘o e koloa mo e ngaahi ngāue hū mai mei muli´. ‘Oku kei ma’olunga pē eni ‘i he tu’unga ma’ulalo taha ‘oku fiema’u ‘e he Pangikē Pule´, ‘a ia ko e māhina ‘e 3 ki he 4 ‘o e koloa mo e ngaahi ngāue hū mai mei muli´.
Na’e toe holo ‘a e hikihiki ‘i he totongi koloa fakata’u´ ki he peseti ‘e 5.2 ‘i ‘Aokosi 2017, ‘o mā’olunga si’i ia ‘i he tu’unga fe’unga ko e pēseti ‘e 5 ‘i he fakafuofua ‘a e Pangikē Pulé (reference rate). Na’e makatu’unga ‘a e tupu ‘i he totongi koloa fakata’u´ mei he hiki hake ‘a e totongi ‘o e ngaahi koloa hū mai mei muli´ ‘o tautautefito ki he totongi ‘o e kakano’i manu (sipi), pata, suka, tapaka (Winfield blue) pea mo e kava mālohi (alcohol). Na’e hoko ‘a hono fakahoko ‘a e ngaahi tute fo’ou ‘i he mahina kuo ‘osi (Siulai 2017) ke ne hiki’i hake ‘a e totongi ‘o e koloa hū mai mei muli‘. Na’e toe kake mo e totongi koloa fakata’u fakalotofonua´, makatu’unga mei he si’isi’i ange ‘a e lahi ‘o e kava-Tonga´, lahi e fetō’aki ‘i he totongi ‘o e koloa me’akai fakalotofonua´ pea mo e hiki e totongi ‘o e ‘uhila´.
‘Oku kei fakafuofua pē ‘e he Pangikē Pulé ‘e mālohi ‘a e tupu faka’ekonōmika fakalotofonuá ‘i he kaha’u´. Ko e pa’anga talifaki ‘i mulí ‘oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie pē. ‘Oku makatu’unga eni mei he fakafuofua ‘e kei ‘i he tu’unga mā’olunga ai pē ‘a e ngaahi talafi pa’anga mei mulí pea pehē ki he pa’anga tokoni mei he ngaahi hoa ngāue langa fakalakalaká, neongo ‘e ala uesia ‘a e fakafuofua ko ‘ení mei he fakafuofua ‘e toe lahi ange mo e totongi ‘o e koloa hū mai mei mulí. ‘Oku toe fakafuofua ‘e kei hokohoko atu ai pē ‘a e hikihiki ‘i he totongi koloá ‘i he kaha’u vave maí pea ke toki holo ki he tu’unga fe’unga ko e pēseti ‘e 5 ‘i he fakafuofua ‘a e Pangikē Pulé (reference rate) ‘i he 2017/18. Ka neongo ia ‘oku malava ke uesia ‘a e ngaahi fakafuofua ko ’eni mei he feliliuaki ‘o e ‘ea΄, pea mo ha toe ma’olunga ange ‘a e totongi koloa hū mai mei mulí.
Na’e aofangatuku ‘e he Kovana΄, ‘e kei hokohoko atu ai pē ‘a e tokanga ‘a e Pangikē Pulé ki hono siofi mo muimui’i ofi e ngaahi fakalakalaka faka’ekonōmika fakalotofonuá mo tu’apule’angá, mo tu’u mateuteu ke liliu ‘a e ngaahi fokotu’utu’u ngāue fakapa’angá ‘o ka fiema’u, ke tauhi e ma’uma’uluta ‘a e tu’unga fakapa’angá pea pehe ki he malu mo lelei ‘o e tafa’aki fakapa’anga, pea mo fakapapau’i ‘e ‘ikai ke toe kaunga kovi ‘a e ngaahi fakalakalaka ‘oku hoko´ ki he tupu faka’ekonomika ‘oku ma’uma’uluta mo tolonga.
