The National Reserve Bank of Tonga’s board of directors at its meeting on 31st July 2018 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 the recovery from Tropical Cyclone Gita, 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, stated that the partial domestic economic indicators were mixed but broadly positive overall. The performance of all sectors of the domestic economy was favorable. Despite the lower exported agricultural produce during the month, there was abundant supply of local food due to its harvesting season, which was reflected in the lower domestic prices recorded for food. The on-going construction activities continued to boost the performance of the secondary sector supported by growth in individual housing loans, banks’ lending to manufacturing businesses and electricity production also increased. Several events that took place during the month including annual church conferences and special Sundays for the family improved performance in the tertiary sector. Banks’ total lending rose and total air arrivals increased which coincided with a rise in travel receipts. In addition, the total number of container registrations increased which indicates a vibrant trade sector.
The banking system remained sound and maintained strong capital position, supported by comfortable profitability, and non-performing loans continued to remain low. Liquidity in the banking system (reserve money) increased over May, driven solely by higher currency in circulation to meet public demands. The banks’ total loans to deposit ratio slightly decreased in May from last month and continued to remain below the 80% minimum loan to deposit ratio. This indicates excess liquidity in the banking system and that there is capacity for further lending by the banks. Annually, both deposits and loans grew indicating the active financial inclusion policies of the banks. Total access points in the banking system rose over the year making financial services more widely accessible. The weighted average interest rate spread widened over May due mainly to an increase in the weighted average lending rate.
The foreign reserves fell to $441.9 million in May 2018 due mainly to the return of funds to head offices and increase in total import payments mainly for wholesale & retail goods. This is equivalent to 7.8 months1 of import cover.
Monthly headline inflation slowed to 0.1% in May 2018 from 0.4% last month. This was due mainly to domestic prices declining despite the imported prices rising over the month. The lower domestic prices was due to a decline in the prices of local produce mainly root crops and vegetables. Imported prices however rose by 0.3% as the respective monthly average price for petrol and diesel rose over the month by 3 cents and 5 cents per litre. Over the year to May 2018, the headline inflation remained high at 9.4%, although slowing from 9.6% in April 2018, due mainly to domestic prices rising from a low level in May 2017. Domestic prices contributed 5.6 percentage points to the overall inflation mainly attributed to higher local food prices as a result of seasonality and damages to fruits and vegetables caused by Tropical Cyclone Gita. The prices of local fruits and vegetables rose over the year by 44.5% due to higher prices of tomatoes, capsicum, coconuts, watermelon, banana ripe and pawpaw. Other local prices that contributed to the overall headline inflation included kava-Tonga and coral aggregates. The imported component of inflation contributed 3.8 percentage points to the overall headline inflation, due to higher prices of imported food, tobacco and fuel.
The 2017/18 financial year is coming to an end and the Reserve Bank still expects Tonga’s economic growth to remain above 3% for 2017/18. The level of foreign reserves is expected to remain at comfortable level and inflation is anticipated to fall below the Reserve Bank’s inflation reference rate of 5% per annum at the end of 2018. The banking system is expected to continue to remain strong.
Given the above developments and the outlook on the monetary policy targets, the current monetary policy stance is considered appropriate in the medium term. The Reserve Bank will continue to remain vigilant, closely monitor developments in the domestic and global economies and may change its monetary policy setting to support its monetary policy objectives.
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 ‘i he ‘aho 31 ‘o Siulai 2018, 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´ pea mo tokoni ki he fakaakeake meiˊhe saikolone fakatalopiki ko Gita (Tropical Cyclone Gita).
- 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 fetō’aki ‘a e ngaahi ngāue faka’ekonōmika fakalotofonua´ ka ko hono fakakātoa na‘e ‘i he tu’unga lelei pē ‘a e ngaahi ngāue faka’ekonōmika ‘i he ngaahi sekitoaˊ. Neongo na‘e holo ‘a hono uta atu e ngoue ki muli´, na‘e kei lahi pe ‘a e ngaahi me‘akai ne toe fakalotofonua koe’uhi ko e lolotonga eni e taimi ututa‘u ‘a ia ne ha eni ‘i he holo ‘a e totongi ‘o e me‘akai fakalotofonua΄. ‘Oku hokohoko atu ai pē ‘a e tupu ‘a e ngaahi ngāue ‘i he sekitoa ‘o e fakatupu koloa´ (secondary sector) ‘o hā mai ‘i he hokohoko ‘i he ngaahi ngaue langa, tupu ‘i he nō langa fale taautaha, kake ‘a e nō fa‘u koloa (manufacturing) ‘a e ngaahi pisinisi´, pea mo e lahiange ‘a e ma‘u‘anga ‘uhila ‘oku tuku mai ki he kakai΄ ‘i he lolotonga ‘o e māhina´. Na‘e tokoni ‘a e ngaahi kātoanga ne fakahoko ‘i he lolotonga ‘o e mahina΄ ‘o hangē ko e konifelenisi fakata‘u ‘a e ngaahi siasi΄ pea mo e ngaahi Sapate fakamamafa ‘o e mahu‘inga ‘o e famili΄ ki he tupu ‘a e sekitoa ki he ngaahi ngāue´ (tertiary industry). Na‘e lahiange ‘a e ngaahi nō na‘e tuku 'atu ‘e he ngaahi pangikē, pea tokolahi ange ‘a e kakai ne tu‘uta vakapuna mai ki Tongaˊni mei tu‘apule‘anga´ ‘o fenāpasi ia mo e hiki hake ‘a e lahi ‘o e pa’anga hū mai mei he folau ‘eve‘eva΄. Na‘e hiki hake foki mo e lahi ‘a e ngaahi koniteina hū mai mei muli΄ ‘o hā mei ai ‘oku kei ‘i he tu‘unga fakafiemālie pe ‘a e sekitoa fefakatau‘aki΄.
‘Oku kei ‘i he tu‘unga lelei pe ‘a e fai fatongia ‘a e ngaahi pangikē fakakomēsiale´, ‘o makatu‘unga meiˊhe tu‘unga fakafiemālie ‘a ‘enau tupu´ (profitability) pea pehē ki he kei ‘i he tu‘unga ma‘ulalo ai pē ‘a e ngaahi nō ‘oku palopalema´. Na‘e hiki hake ‘a e pa‘anga ngāue (liquidity) ‘a e ngaahi pangikē ‘i Mē ‘o makatu’unga meiˊhe lahiange ‘o e pa‘anga na‘e tuku atu ki he kakai ke feau ‘enau ngaahi fiema‘u΄. 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) ‘i Mē kae 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. ‘I he ta‘uˊ ki Mē 2018, na‘e kake ‘a e nō pea mo e fakahū pa‘anga ‘o hā mei ai ‘oku ngāue ‘a e ngaahi fokotu‘utu‘u ngāue ‘a e ngaahi pangikē ke fakafaingofua‘i ‘a hono ngaue‘aki ‘a e ngaahi ngāue fakapa‘anga΄. Na‘e toe lahiange ‘a e ngaahi feitu‘u ‘oku malava ke ma‘u mei ai ‘a e ngaahi ngāue fakapa‘anga (access points) ‘a ia ‘oku mahino mei ai ‘oku faingofua ange ki he kakai ke fakahoko ‘enau ngaahi ngaue fakapa’anga΄. Na’e kake ‘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 Mē ‘o makatu‘unga meiˊhe lahi ange ‘a e kake ‘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) ki he $441.9 miliona ‘i Mē 2018, makatu‘unga meiˊ he lahiange ‘a e totongi atu ‘e he ngaahi kautaha fakalotofonua e ‘inasi (dividend) ki honau ‘ulu‘i ‘ofisi ‘i muli΄ pea mo e lahiange ‘a e totongi ki he hū koloa mai mei muli΄ (wholesale & retail imports). ‘Oku fe‘unga ‘a e tu‘unga lolotonga ‘o e pa‘anga talifaki´ pea mo e māhina ‘e 7.8 ‘o e koloa mo e ngaahi ngāue hū mai mei muliˊ.
Na‘e holo ‘a e hikihiki ‘i he totongi fakalūkufua ‘o e koloa΄ ki he peseti ‘e 0.1 ‘o fakahoa ki he peseti ‘e 0.4 ‘i he māhina kuo‘osi΄ ‘o makatu‘unga mei he holo ‘a e totongi fakalūkufua ‘o e ngaahi koloa fakalotofonua΄ neongo ‘a e hiki hake ‘a e totongi ‘o e ngaahi koloa hū mai mei muli΄. Ko e holo ‘a e totongi fakalūkufua ‘o e ngaahi koloa fakalotofonua΄ na‘e makatu‘unga ia mei he lahiange ‘a e ngaahi me‘akai fakalotofonua ‘o hangē ko e ngaahi me‘akai foha΄ pea mo e vesitapolo΄. Ko e totongi fakalūkufua ki he ngaahi koloa hū mai mei muli΄ na‘e hiki hake ‘aki ‘a e peseti ‘e 0.3 ‘i he mahina ko Mē ‘o makatu‘unga mei he hiki ‘a e totongi ‘o e penisini΄ pea mo e tisiolo΄ ‘aki ‘a e taki seniti ‘e 3 mo e seniti ‘e 5. Na’e kei ma‘olunga pe ‘a e totongi fakalūkufua ‘o e ngaahi koloa hū mai mei muli´ ‘i he faka’osinga ‘o e ta’u´ ‘i he peseti ‘e 9.4 ‘o fakahoa ki he peseti ‘e 9.6 ‘i he mahina kuo‘osi΄. Na‘e makatu‘unga ‘eni mei he hiki lahi ‘a e totongi koloa fakalotofonua mei he tu’unga ma’ulalo na’e ‘i ai ‘i Mē 2017. Na‘e tokoni peseti ‘e 5.6 ‘a e totongi koloa fakalotofonua΄ ki he hikihiki ‘i he totongi koloa fakalūkufua΄, ko e ola ia ‘o e fetō‘aki ‘a e ngaahi to‘ukai pea mo e maumau ne fakahoko ‘e he saikolone Gita ki he fua‘i‘akau pea mo e vesitapolo fakalotofonua΄. Na‘e hiki ‘aki ‘a e peseti ‘e 44.5 ‘a e ‘avalisi ‘o e totongi ‘o e fua‘i‘akau pea mo e vesitapolo ‘o kau ki ai ‘a e temata, polo, niu, meleni, siaine momoho pea mo e lesi΄. Ko e ngaahi totongi koloa fakalotofonua kehe na‘e tokoni ki he hikihiki fakata‘u ‘a e totongi koloa fakalūkufua΄ na‘e kau ki ai ‘a e kava-Tonga pea mo e loli makamaka fakatau΄. Na‘e tokoni peseti ‘e 3.8 ‘a e totongi koloa hū mai mei muli΄ ki he hikihiki ‘i he totongi koloa fakalūkufua΄ ‘o makatu‘unga mei he hiki hake ‘a e totongi ‘o e me‘akai hū mai mei muli΄, sikaleti΄ pea mo e totongi lolo΄.
‘I he ofi ki he faka’osinga ‘o e ta‘u fakapa‘anga 2017/18 ‘oku kei tu‘uma‘u pe ‘a e fakafuofua ‘a e Pangikē Pule´ ‘e laka hake ‘a e tupu faka‘ekonōmika ‘a e fonua΄ ‘i he peseti ‘e 3 ki he 2017/18. Ko e pa‘anga talifaki ‘i mulí ‘oku fakafuofua ‘e kei ‘i he tu’unga fakafiemālie pē. ‘Oku toe fakafuofua ‘e ‘i he tu’unga ma’ulalo pē ‘a e hikihiki ‘i he totongi koloaˊ pea ‘e ma’ulalo pē ia ‘i he tu’unga fe’unga (reference rate) ko e pēseti ‘e 5 ‘i he faka’osinga ‘o e 2018. ‘Oku hokohoko atu ai pē ‘a e tu’unga fakafiemālie ‘a e ngaahi pangikē. Koe’uhī ko e ngaahi fakamatala ko ‘eni´, ‘e hokohoko atu ai pē ‘a e ngaahi tu’utu’uni ngāue fakapa’anga lolotonga´. Pea ‘e kei hokohoko atu ai pē ‘a e tokanga ‘a e Pangikē Pule´ ki hono siofi mo muimui’i ofi e ngaahi fakalakalaka faka’ekonōmika fakalotofonua´ mo tu’apule’anga´, mo tu’u mateuteu ke liliu ‘a e ngaahi fokotu’utu’u ngāue fakapa’anga ‘o ka fiema’u pea mo fakapapau’i ‘e ‘ikai ke kaunga kovi ‘a e ngaahi fakalakalaka ‘oku hoko´ ki he tupu faka’ekonōmika ‘oku ma’uma’uluta mo tolongaˊ.
