The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 30th of September 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 domestic activities for July 2020 was generally slow without the normal annual festivities. Cancellation of the Heilala Week Festival and the Royal Agricultural Show contributes to dampening aggregate demand. For the primary sector, total volume of agricultural exports decreased during the month, although still higher than July of the previous year. Households show resilience and consistent preparation in anticipation of a shortage in food supply particularly imported products by engaging more in backyard farming and home gardening. Reconstruction and rehabilitation projects from recent cyclones supported the industry sector with the completion of various projects such building schools, private households, and office premises. The first repatriation flight provided some activity for accommodation providers that were used as a quarantine facility, however it is still not sufficient to counteract the standstill in tourism. Container and vehicle registrations have picked up during the month indicating some positive trading activities, however these levels are still relatively lower compared to the previous year.
Inflation rose in July 2020 with a monthly movement of 0.5% driven solely by higher imported prices whilst domestic prices declined. Annual inflation for July 2020, however, declined by 1.1%, which is slightly higher than the deflation rate of 1.4% last month but lower than deflation rate of 0.5% in July 2019. Import prices fell due to lower global oil and food prices. Meanwhile, domestic prices declined due to lower prices for electricity and Kava Tonga.
In July 2020, the official foreign reserves rose to a new record high of $555.9 million, noting an increase of $12.1 million in the month, and an increase of $63.0 million in the year. This owes to inflow of remittances and project grants from development partners. Tonga’s remittance picked up strongly in July 2020 defying expectations of a decline from the impact of COVID-19. Majority of the remittance receipts are family support and monetary gifts, which will assist in cushioning some of the fallouts in domestic activities.
The total banking system still maintains its soundness supported by strong capital and adequate profits. The banks’ total loans to deposit ratio declined to 76.8% from 77.9% last month as loans declined while deposits rose. The shrinking of this ratio continues despite excess liquidity existing in the system and a rise in money supply. Meanwhile, lending remains subdued as demand is considerably lower. The weighted average interest rate spread declined both over the month and year to July 2020 by 0.1 and 43.3 basis points respectively to 5.674%. This stems from declines in both lending and deposit rates.
Given the above developments, the Reserve Bank continues to review its GDP forecasts and projects a moderate downturn in future economic growth. Foreign reserves is still expected to be well above the 3 months minimum threshold of import cover, while inflation is also expected to remain below the 5% reference rate. The banking system is still sound supported by high liquidity. Meanwhile, 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 30 ‘o Sepitema 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, naé māmālie ange á e ngaahi ngāue faka’ekonōmika fakalotofonua´ í he māhina Siulai 2020, koeúhi´ koe íkai fakahoko á e ngaahi kātoanga fakataú angamaheni´. Tupu pea mei hono kaniseli ‘o e Uike Heilala´ mo e ngaahi kātoanga Fakaáliáli Ngoue´ naé holo aipē á e fiemaú fakatau koloa á e kakai´. Í he vakai ki he sekitoa ngoue´, vaotātāa mo e toutai´, naé holo á e lahi ó e ngoue naé fakatau atu ki tuápuleánga´ í he māhina ni, neongo óku kei māólunga ange pē á e tuúnga ko´ eni í hono fakahoa ki he Siulai ó e taú kuo ósi´. Óku mahino foki á e tokanga ange á e ngaahi ápi taautaha´ kenau mateuteu feúnga telia naá tō ha honge í he fonua´, áki énau kau atu ki he ngaahi polokalama tō ngoue´ mo tō vesitapolo faka’api´. Óku lolotonga lele foki mo e ngaahi langa fakaakeake mei he ngaahi Saikolone´ ó fakakakato ai hono langa ó ha ngaahi loki ako, ngaahi fale nofoánga, mo e ngaahi ófisi ngāue é niíhi, á ia é tokoni eni ki he sekitoa fakatupu koloa´. Naé maú foki mo ha ngaahi ngāue á e ngaahi kautaha hōtele é niíhi ne ngaueáki ki hono kolonitini ‘o e kau folau mai´, í he kamata ko ia hono fakafoki mai á hotau kainga ne tuku vaka´ í muli´, neongo óku íkai lahi feúnga á e ngāue ko´ eni ke ne feau á e uesia lahi óku lolotonga hoko ki he sekitoa Takimamata´. Naé hā mai á e kake í he lahi ó e ngaahi koniteina mo e meálele ne lēsisita he māhina´ á ia óku hā mei heni ha kake sí’í ‘í he sekitoa fefakatauáki´, kā óku mahino pē óku íkai ke aú eni ki he tuúnga māólunga na’e í ai í he taú ki muá´.
Na’e hiki ‘a e tu’unga ‘o e totongi koloa fakalūkufua΄ áki ‘a e peseti ‘e 0.5 í Síulai, makatu’unga mei he hiki ‘a e ngaahi totongi koloa hū mai mei muli΄, kae kei holo pe á e ngaahi totongi koloa fakalotofonua΄. Í he vakai ki he lolotonga ó e taú ki Síulai 2020, naé holo e tuúnga ó e totongi koloa fakalūkufua áki ‘a e peseti ‘e 1.1 á’ia óku maólunga ange ia í he holo peseti ‘e 1.4 ‘i he mahina kuoósi, kae maúlalo ange í he holo peseti ‘e 0.5 ‘i Siuali 2019. Naé holo á e totongi ó e ngaahi koloa hū mai mei muli΄ ‘o makatuúnga mei he holo á e totongi fakamāmāni lahi ó e lolo΄ mo e meákai΄. Í he taimi tatau, naé holo á e totongi ó e ngaahi koloa fakalotofonua΄ makatuúnga mei he holo á e totongi úhila΄ mo e Kava Tonga΄.
Í Siulai 2020, na‘e toe tupu pē á e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ki ha tuúnga māólunga foóu ko e $555.9 miliona, á ia naé tupu áki á e $12.1 miliona í he māhina´, mo e $63.0 miliona í he taú´. Na’e makatu’unga ‘a e tupu ko´ eni mei´ he lahi ange á e talafi paánga taautaha mai mei muli´ (remittances), mo e ngaahi tokoni fakapaánga mei hotau ngaahi hoa ngāue langa fakalakalaka´. Í he māhina ó Siulai 2020 naé tupu mālohi ai á e talafi paánga taautaha mai mei muli´, ó fehangahangai ia mo e ngaahi fakafuofua é useia lahi é he COVID-19 á e lahi ó e paánga é maú mai mei he ngaahi kāinga nofo muli´. Ko e lahi taha ó e ngaahi talafi paánga taautaha ko´ eni koe taumuá tokoni pē ki he ngaahi fiemaú fakapaánga fakaáho á e ngaahi famili´, á ia óku tokoni lahi eni ki hono haofakií ákinautolu óku uesia tamaki í he hōloa á e ngaahi ngāue fakaékonōmika fakalotofuna´.
Óku 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 holo ‘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), ki he peseti ‘e 76.8 mei he peseti ‘e 77.9 í he māhina´ kuo ósi´. ‘Oku hokohoko pē á e holo e fika ko´ eni, neongo óku kei lahi pē á e hulu í he paánga ngaue á e ngaahi pangikē (excess liquidity), mo e paánga fakalūkufua á e fonua´ (money supply). Í he taimi tatau, óku kei holo pē foki mo e ngaahi nō kuo tuku atu´, koéúhi pē ko e holo á e fiemaú fakatau koloa á e kakai´. Ko e ‘avalisi ‘o e totongi tupu ‘i he nō mo e fakahū pa’anga´ (weighted average interest rate spread) naé holo fakatouósi ‘i he māhina´ ‘aki ‘a e poini peseti ‘e 0.1, pea ‘i he ta’u´ ‘aki ‘a e poini peseti ‘e 43.3 ki he peseti ‘e 5.67. Na’e makatu’unga eni mei he holo fakataha pē ‘a e totongi tupu ‘i he ngaahi nō (lending rates) mo e totongi tupu í he ngaahi fakahū paánga´ (deposit rates).
Fakatatau ki he ngaahi fakamatala fakamuimui taha óku fakahā atu ‘i ‘olunga´, naé holoki ai é he Pangikē Pule´ á e fakafuofua ki ha holo lahi á e tupu faka’ekonōmika ‘a e fonuaˊ, ki ha holo óku siísií ange. Ka neongo ia, óku kei ámanaki pē é fakafiemālie pē ‘a e tuúnga ó e pa‘anga talifaki ‘i mulí´ ‘o lahi ange ‘i he māhina ‘e 3 ‘o e koloa hū maiˊ, pea kei ma’ulalo pē ‘á e tu’unga ‘o e totongi koloa fakalūkufua´ i he peseti ‘e 5. Ko e ngaahi pangikē ‘oku kei malu 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 fakalūkufua΄.
