The National Reserve Bank of Tonga’s Board of Directors at its board meeting on the 31st of August 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 despite the impact of COVID-19 on domestic performance, the available economic indicators over the year to June 2020 did not contract as much as initially anticipated. The primary sector shows resilience as a result of the recovery from recent cyclones and effective preparatory measures to ensure food security. The secondary sector picked up on activities in the construction sector with the reconstruction projects from TC Gita and TC Harold. The mining & quarrying sector continue to benefit from the road improvement projects. The tertiary sector still struggles with the inactive tourism sector and weaker aggregate demand. However, businesses have expanded or diversified activities to new markets. As labour conditions tighten, many are turning to the informal sector for income such as subsistence farming and self-employment.
Inflation declined further in June by 1.2% as both local and imported prices declined by 1.3% and 1.1% respectively. Annual inflation for June 2020 also declined by -1.4%, which is lower than the 1.8% inflation in June 2019 and 0.1% in May 2020. Import prices fell due to lower global oil prices passing through to local transport and electricity prices. Similarly, domestic prices also declined over the year driven mainly by the lower Kava Tonga prices as supply improves along with the other local food supplies, while demand weakens.
The official foreign reserves significantly rose at the end of the fiscal year by $59.5 million. This was due to receipts of official funds as assistance for TC Harold, budget support, and for COVID-19 preparations and remittances. This brings foreign reserves to $543.8 million, equivalent to 8.2 months of imports of goods and services, well above the minimum 3 months of imports cover.
The total banking system still maintains its soundness supported by strong capital and adequate profits. The banks’ total loans to deposit ratio declined to 77.9% from 80.5% last month as loans declined while deposits rose. Lower lending indicates cautiousness to invest, while the higher deposits suggest more preference to save, falling demand from lower consumption activities, and additional savings from the fiscal stimulus packages. Money supply and liquidity has expanded over the month and year as a result of the influx of foreign reserves boosting government deposits, while lending is subdued. The weighted average interest rate spread narrowed both over the month and year to June 2020 by 3.7 and 43.2 basis points respectively to 5.66%. This stems from lower average lending rates, coupled with higher average deposit rates.
Given the above developments, the Reserve Bank has reviewed its GDP forecasts and is now expecting a smaller downturn in the economy than previously anticipated. 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 31 ‘o ‘Aokosi 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, neongo á e uesia é he COVID-19 ‘a e ngaahi ngāue faka’ekonōmika fakalotofonua´, ka ko e ngaahi fakamatala kuo tānaki í he taú ki Sune 2020 óku ha mai naé íkai ke fuú uesia lahi ó hangē koe ngaahi fakafuofua ki muá´. Naé fakafiemālie pē á e ola e ngaahi ngāue á e sekitoa ngoue´, koeúhi ko e ngaahi ngāue fakaakeake mei he ngaahi saikolone fakatalopiki naé toki hoko´, mo e ngaahi tokateu ne fakahoko ke fakapapauí é ‘ikai ke tō ha honge he fonua´. Naé ki’i kake hake mo e ngaahi ngāue í he sekitoa ó e fakatupu koloa´ mei he ngaahi polōseki tokoni ki hono toe langa hake e ngaahi fale ne maumau’í é he Saikolone Fakatalopiki Gita mo Haloti´. Óku kei poupou pē á e polōseki ki hono fakalelei’i ó e ngaahi hala puleánga´ ki he tupu á e sekitoa keliánga koloa´ mo e maka´. Óku kei faingata’a’ía pe á e sekitoa ki he ngaahi ngāue ‘i he tuú á e takimamata mo e holo e ngaahi fiemaú koloa´ mo e sēvesi´. Ka neongo ia, ‘oku lahi ‘a e ngaahi pisinisi kuo nau fakalahi pe liliu á ‘enau ngaahi ngāue angamaheni´ ki ha ngaahi māketi foóu. Óku toe siísií ange mo e ngaahi faingamālie ki he maú ngāue, pea ko e tokolahi ó kinautolu kuo mole énau ngāue, kuo nau tafoki ki he ngaahi ngāue óku íkai ke lēsisita he pule’anga´ (informal sector) ke kumi ai haánau maúánga paánga, hangē ko e ngoue fakataautaha´ (subsistence) pe ko e ngaahi ngāue pē á kita ó fakatau atu (self-employment).
Na’e to e holo ‘a e tu’unga ‘o e totongi koloa fakalūkufua΄ í Sune áki ‘a e peseti ‘e 1.2, makatu’unga mei he holo fakatouósi ‘a e ngaahi totongi koloa fakalotofonua΄ áki á e peseti é 1.3, mo e ngaahi totongi koloa hū mai mei muli΄ ‘aki ‘a e peseti ‘e 1.1. Í he taú ki Sune 2020, naé holo ‘a e tu’unga ‘o e totongi koloa fakalūkufua΄ áki ‘a e peseti ‘e 1.4 ‘oku ma’ulalo ange ia ‘i he tupu peseti ‘e 1.8 ‘i Sune 2019, mo e tupu peseti ‘e 0.1 ‘i Mē 2020. 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΄, ó tokoni aipē ki he holo á e totongi ki he fefonongaáki΄ mo e úhila΄. Í he taimi tatau, naé holo á e totongi ó e ngaahi koloa fakalotofonua΄ makatuúnga mei he holo á e totongi ki he Kava Tonga tupu mei he éne lahi ange í he māketi΄ pehē ki he mahu á e meátokoni fakalotofonua΄, kae holo á hono fiemaú ke fakatau΄.
Na‘e tupu lahi ‘a e tu‘unga ‘o e pa‘anga talifaki ‘i muli´ (foreign reserves) ‘i he taú fakapaánga´ áki á e $59.5 miliona. Na’e makatu’unga ‘a e tupu ko eni mei´ he hū mai ‘a e ngaahi tokoni fakapa’anga ki he Saikolone Fakatalopiki Haloti´, tokoni fakapaánga ki he patiseti á e Puleánga´, ngaahi tokoni ki he tokateu ki he COVID-19, mo e talafi paánga fakataautaha mai mei muli´. Óku feúnga á e tuúnga ó e pa‘anga talifaki´ mo e $543.8 miliona á ia óku feúnga ia mo e māhina ‘e 8.2 ‘o e ngaahi koloa mo e ngāue hū mai mei muli, á ia óku kei māólunga pē he tuúnga maúlalo taha´ ko e māhina ‘e 3.
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 77.9 mei he peseti ‘e 80.5 í he māhina´ kuo ósi, makatuúnga mei he holo á e ngaahi nō, kae lahi ange á e ngaahi fakahū pa‘anga´. ‘Oku hā mei he holo á e ngaahi nō á e fakaalaala ange á e kau ke ínivesitoa mei he ínivesi´, kae lahi ange pē hono fakahū e pa‘anga´ tupu mei he siísií á e ngaahi kātoanga ke fai ai e fakamole´, mo e ngaahi paánga tānaki mai mei he ngaahi tokoni kehekehe á e Puleánga´. Naé kake hake á e paánga ngāue í he māhina´ mo e taú´, tupu pe mei he kake á e paánga talifaki í muli´ ó tokoni ki he fakahū pa‘anga´ á e Puleánga´, kae holo á e ngaahi nō kuo tuku atu´. 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´ ó Sune 2020 ‘aki ‘a e poini peseti ‘e 3.7, pea ‘i he ta’u´ ‘aki ‘a e poini peseti ‘e 43.2 ki he peseti ‘e 5.66. Na’e makatu’unga eni mei he holo ‘a e totongi tupu ‘i he ngaahi nō (lending rates), fakataha mo e kake á e totongi tupu í he ngaahi fakahū paánga (deposit rates).
Makatu‘unga pea mei´ he ngaahi fakamatala kuo fakahā atu ‘i ‘olunga´, naé toe vakaií ai é he Pangikē Pule´ éne ngaahi fakafuofua ki he tupu faka’ekonōmika ‘a e fonuaˊ. Naé holoki ai é he Pangike Pule éne fakafuofua ki he holo á e tupu fakaékonomika á e fonua ki ha tuúnga óku toe 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΄.
