The Reserve Bank maintained its accommodative monetary policy stance which supported the monetary policy objectives of maintaining internal and external monetary stability, promoting financial stability and a sound and efficient financial system, and conducting its activities in a manner that supports macroeconomic stability and economic growth.

Preliminary figures released from the Tonga Statistics Department shows a Real GDP growth of 0.2% for 2017/18 following very strong growth of 5.4% in 2016/17. The slowdown in 2017/18 was mainly driven by negative growths in the construction, fisheries, and utility sector. Other sectors recorded slower growth compared to the previous year except for the Mining & Quarrying sector, and the Ownership of dwellings. The Reserve Bank forecasted a 3.1% growth for 2017/18 in its August 2018 MPS, underpinned by infrastructure projects, housing construction projects and rehabilitation activities following the TC Gita. However, delays to the implementation of these projects resulted in the much lower turn out. However, the Reserve Bank forecast a stronger growth of 3.4% for 2018/19 based on the implementation of the delayed projects from 2017/18 coupled with better performance from the primary, industry and tertiary sector as they slowly recover from the impacts of TC Gita.

The annual headline inflation has returned below the Reserve Bank’s reference rate of 5% since December 2018. In February 2019 it has declined further to 3.2% mostly driven by lower import prices of food products and oil. Domestic prices increased by 8.5% over the year due to rising prices of local food items and tobacco. However, this was offset by the decline in import prices. Headline inflation is expected to remain below the 5% reference rate throughout 2019.

The balance of the Overseas Exchange Transactions (OET) recorded a $1.5 million deficit, over the six months to February 2019, compared to a $27.0 million surplus in the six months to August 2018. This deficit is underpinned by the widening of the current account deficit due to growing import payments and lower transfer receipts. Consequently, the official foreign reserves declined to $473.5 million in February 2019 from $475.0 million in August 2018, sufficient to cover 8.0 months of import of merchandise goods and services1, which is still above the Reserve Bank’s minimum of 3 months of import. The level of foreign reserves is expected to remain at comfortable levels, well above the minimum of 3 months of import cover supported by expected receipts of budgetary support, grant funds from development partners, and expected higher receipts of remittances. This will be partially offset by the projected rise in imports and scheduled repayment of external debt.

The banking system continued to remain sound supported by strong capital position, adequate profitability, high liquidity, and low levels of non-performing loans. Over the six months to February 2019, the total banks’ lending continued to rise to a new record high, whereas deposits slightly declined. The weighted average interest rate spread also widened as lending rates increase while deposit rates declined.

Meanwhile, the banks’ total loans to deposit ratio rose from 71.5% in August 2018 to 76.0% in February 2019. This remains below the 80% minimum loan to deposit ratio, which indicates there is still capacity for further lending by the banks. While strong credit growth is expected for 2018/19, the Reserve Bank continues to monitor this closely for any signs of overheating in the economy and any potential threat to financial stability.

Government deposits rose by 14.3% over the past six months to February 2019, resulting in the lower net credit to Government. Higher government revenue collection combined with receipts of budgetary support, grants, and cyclone relief funds from development partners supported the higher government deposits. Net credit to Government is anticipated to decrease in the near term as a result of expected Government budgetary support and Government grants receipts, as well as improved Government revenue collection. The Reserve Bank will closely monitor the implication of the fiscal policy measures on the monetary policy objectives.

Given the recent developments and the outlook on the monetary policy targets, the Reserve Bank considers its current monetary policy stance to be appropriate in the medium term. Therefore, the Reserve Bank will maintain its current accommodative monetary policy measures in the medium term in order to encourage the utilization of the excess liquidity in the banking system to increase lending, particularly to the growth sectors, in order to support domestic economic growth, the recovery from TC Gita, and strengthen the monetary policy transmission mechanism. Furthermore, the Reserve Bank will continue to monitor developments in the domestic and global economy closely, and update its monetary policy setting to maintain internal and external monetary stability and to promote a sound and efficient financial system that supports macroeconomic stability and economic growth.

+ - Press Release in Tongan Click to collapse

Fakamatala Fokotu‘utu‘u ngāue fakapa‘anga ki Fepueli 2019

Na‘e tali ‘e he Poate ‘a e kau Talēkita ‘a e Pangikē Pule Fakafonua ‘o Tonga΄, ke tukuange atu ‘e he Pangikē Pule Fakafonua ‘a Tonga΄ ‘a e Fakamatala Fokotu‘utu‘u Ngāue Fakapa‘anga ki Fepueli 2019. Ko e fakamatala ko ‘eni΄ ‘oku hā atu ai ‘a e vakai ki he ngaahi fakalakalaka faka’ekonōmika ‘i Tonga ni΄ mo e founga hono fakahoko ‘o e ngaahi ngāue fakapa’anga΄ ‘i he māhina ‘e ono ki Fepueli 2019, fakataha mo e ngaahi fakafuofua ki he kaha‘u΄.

‘Oku kei hokohoko atu pē ‘a e ngaahi fokotu’utu‘u ngāue fakapa‘anga lolotonga ‘a e Pangikē Pule΄, ‘i hono tokangaekina ‘a e ma’uma’uluta fakalotofonua΄ mo tu‘apule‘anga΄, fakapapau’i ‘oku malu mo lelei pē ‘a e ngaahi ngāue fakapa’anga΄, pea fakahoko ‘ene ngaahi ngāue ‘i ha founga ‘oku ne faka‘ai‘ai mo pātoloaki ‘a e fakalakalaka mo e tupu faka‘ekonōmika ‘a e fonua΄.

Na‘e tuku mai ‘e he Potungāue Sitetisitika ‘a Tonga΄ ‘a e ngaahi fika faka’ofisiale ki he tupu faka‘ekonōmika totonu ‘a e fonua΄, ‘a ia ko e peseti ‘e 0.2 ‘i he 2017/18, hili ia ‘a e tupu mālohi peseti ‘e 5.4 ‘i he 2016/17. Ko e māmālie ko eni ‘a e tupu faka‘ekonōmika΄ ‘i he 2017/18, ne makatu‘unga mei he holo ‘a e tupu ‘i he sekitoa langa΄, toutai΄, pea mo e ngaahi fiema‘u faka‘api΄. Ko e ngaahi sekitoa kehe΄, na‘e māmālie ange ‘enau tupu ‘i hono fakahoa ki he ta‘u 2016/17΄, tukukehe ange ‘a e sekitoa keli‘anga koloa mo e maka΄ pea mo e sekitoa ki he ngaahi ‘api nofo‘anga΄. Na‘e fakafuofua foki ‘e he Pangikē Pule΄ ‘i he Fakamatala Fokotu‘utu‘u Ngāue Fakapa‘anga ‘o ‘Aokosi 2018, ‘e tupu peseti ‘e 3.1 ‘a e ‘ekonōmika ‘i he 2017/18. Ne fakatefito ‘a e fakafuofua΄ni mei he ngaahi ngāue polōseki lalahi ‘a e pule’anga΄, langa fale fakataautaha΄, pea mo e ngaahi ngāue langa fakaakeake mei he maumau ne fakahoko ‘e he saikolone Gita ‘a ia na’e teu fakahoko ‘i he 2017/18. Kaekehe, tu’unga pea mei hono toloi ‘a hono fakahoko ‘a e ngaahi ngāue ko ‘eni ki he ta’u fakapa’anga hoko΄, ne ma‘ulalo pē ‘a e tupu faka‘ekonōmika΄. Ka neongo ia΄, ‘oku fakafuofua ‘a e Pangikē Pule΄ ‘e tupu mālohi peseti ‘e 3.4 e ‘ekonōmika΄ ‘i he ta’u 2018/19, makatu‘unga mei he ngaahi ngāue poloseki lalahi ne toloi mai mei he 2017/18, fakataha mo e fakafuofua ‘e lelei ange e ola ‘o e ngaahi ngāue faka‘ekonōmika ‘i he sekitoa Ngoue΄, Toutai΄ mo e Vao’akau΄, sekitoa ‘o e Ngaahi Ngāue Fakatupu Koloa΄, mo e sekitoa ‘o e Ngaahi Ngāue΄, hili ’enau fakaakeake mei hono uesia ‘e he saikolone Gita.

Na‘e kamata ‘i Tisema 2018 ‘a e ma‘ulalo e hikihiki ‘i he totongi koloa fakalūkufua΄ ‘i he peseti ‘e 5 ‘oku faka‘amu ‘a e Pangikē Pule΄ ke ma’ulalo pē ai e hikihiki ‘i he totongi koloa΄. ‘I Fepueli 2019, na‘e fe’unga mo e peseti ‘e 3.2 e hikihiki ‘i he totongi koloa fakalūkufua΄ ‘o makatu‘unga mei he holo e totongi ‘o e me‘akai΄ mo e lolo hū mai mei muli΄. Na‘e hiki fakata‘u peseti ‘e 8.5 ‘a e totongi koloa fakalotofonua΄ ‘o fakatefito ia mei he ma’olunga ‘a e totongi ‘o e me‘akai΄ mo e tapaka΄. Ka neongo ia΄, na’e hanga ‘e he holo e totongi koloa mei muli΄, ‘o holoki ‘a e tu’unga fakalūkufua ki ha tu’unga si’isi’i ange. ‘Oku fakafuofua ‘e ma‘ulalo pē ‘i he peseti ‘e 5 ‘a e hikihiki ‘i he totongi koloa fakalūkufua΄ ‘i he ta’u 2019.

‘I he māhina ‘e 6 kuo‘osi ki Fepueli 2019, na‘e fe’unga mo e $1.5 miliona e fe‘amokaki ‘i he palanisi fakalūkufua ‘o e fehū’aki pa’anga mo muli΄, ‘o fakahoa ia ki he hulu $27.0 miliona ‘i he māhina ‘e 6 ki ‘Aokosi 2018. Ko e fe‘amokaki ‘i he palanisi ‘o e fehū’aki pa’anga mo muli΄ na‘e makatu‘unga mei he fe‘amokaki ‘i he palanisi e ‘akauni lolotonga΄, tupu mei he lahi ange ‘a e totongi pa‘anga ki he hū koloa mai΄, ka e holo e lī pa‘anga mai mei muli΄. ‘I he’ene pehē, na‘e holo ai e pa’anga talifaki ‘a e pule’anga΄ ‘i muli΄ ki he $473.5 miliona ‘i Fepueli 2019, ‘o fakahoa ki he $475.0 miliona ‘i ‘Aokosi 2018. Na‘e fe‘unga ‘a e tu‘unga ‘o e pa‘anga talifaki΄ ke ne feau ‘a e māhina ‘e 8.0 ‘o e koloa mo e ngaahi ngāue hū mai mei muli΄, ‘a ia ‘oku kei ma‘olunga ‘aupito pē ‘eni ‘i he tu‘unga fe‘unga ‘oku fiema’u ‘e he Pangikē Pule΄, ko e māhina ‘e 3. ‘Oku fakafuofua ‘e ‘i he tu‘unga fakafiemālie ai pē ‘a e pa‘anga talifaki ‘i muli ‘a e pule‘anga΄ makatu‘unga mei he fakafuofua ‘e toe lahi ange ‘a e ngaahi pa‘anga hū mai ki he tokoni fakapatiseti΄, tokoni ki he Pule’anga΄ mei he ngaahi hoa ngāue fakalakalaka ‘a e fonua΄, pea mo e lī pa’anga taautaha mai mei muli΄. ‘Oku toe fakafuofua foki ‘e lahi ange ‘a e hū koloa mei muli΄ pea mo e ngaahi totongi nō ki tu‘apule‘anga΄, ‘a ia te ne malava ‘o holoki hifo ‘a e pa’anga talifaki ‘a e pule’anga΄ ‘i muli΄.

Lolotonga ia΄, ‘oku kei ‘i he tu‘unga fakafiemālie΄ pē ‘a e ngāue ‘a e ngaahi pangikē, ‘a ia ‘oku mālohi fe’unga pē ‘a ‘enau sino’i pa‘anga tefito΄ (capital), tu’unga ma’olunga ‘a e tupu fakapa‘anga΄ (profitability) mo e pa’anga ngāue (liquidity), pea kei ma’ulalo pē ‘a e ngaahi nō palopalema΄. Na‘e lahi ange ‘a e ngaahi nō kuo tuku atu ‘e he ngaahi pangikē ‘o a’u ki ha tu’unga ma‘olunga fo’ou ‘i Fepueli 2019, ka e holo e fakahū pa’anga΄. Na‘e kake e ‘avalisi ‘o e totongi tupu ‘i he nō mo e fakahū pa’anga´ (weighted average interest rate spread), tupu pea meiˊ he lahiange ‘a e hiki ‘i he totongi tupu ‘a e ngaahi nō, ‘i hono fakahoa ki he holo ‘a e totongi tupu ‘i he fakahū pa‘anga´. Na‘e fakahoko ‘a e liliu ki he founga hono fika‘i eni´ ‘i Fepueli 2017, ke fakakau ‘a hono hū mai ‘a e koloa´ pea mo e ngaahi ngāue mei muli´. Ko e founga ne ngāue‘aki ‘i he ngaahi lipooti kimu‘a´ ne fakakau pē ‘a hono hū mai ‘a e koloa ‘ata’atā pē.

Ko e lahi ‘o e ngaahi nō ‘i hono fakahoa ki he lahi ‘o e ngaahi fakahū pa’anga΄ (loan/deposit ratio), na‘e tupu hake mei he peseti ‘e 71.5 ‘i ‘Aokosi 2018, ki he peseti ‘e 76.0 ‘i Fepueli 2019. ‘Oku kei ma’ulalo pē ‘eni ‘i he peseti ‘e 80 kuo tu‘utu‘uni ‘e he Pangikē Pule΄, ‘a ia ‘oku kei ‘i ai pe faingamālie ke toe lahi ange ‘a e nō ‘e tuku atu΄. Neongo e fakafuofua ‘e tupu mālohi e lahi ‘a e nō ‘e tuku atu ‘i he ta’u 2018/19, ‘e kei hokohoko atu pē ‘a hono siofi eni ‘e he Pangikē Pule΄ ki ha ngaahi faka’ilonga ‘e ngali kaunga kovi ki he tupu faka‘ekonōmika ‘a e fonua΄, pe ko ha fa’ahinga uesia ki he ngaahi ngāue fakapa‘anga΄.

Na‘e hiki hake ‘a e fakahū pa‘anga ‘a e Pule‘anga΄ ‘aki e peseti ‘e 14.3 ‘i he mahina ‘e 6 kuo ‘osi ki Fepueli 2019, ‘a ia ‘e si‘isi‘i ange ‘a e lahi e pa’anga ‘e totongi ‘e he ngaahi pangikē ki he Pule’anga΄. ‘Oku fakatefito ‘a e lahi ange e fakahū pa‘anga ‘a e Pule‘anga΄ mei he lahi ange e tānaki pa’anga hū mai ΄, ngaahi pa’anga tokoni fakapatiseti΄, tokoni ki he ngaahi polōseki ‘a e Pule’anga΄, pea mo e ngaahi pa‘anga tokoni afaa mei he ngaahi fonua hoa ngāue fakalakalaka΄. ‘Oku fakafuofua ‘e holo ai pē 'a e lahi e pa‘anga ‘e totongi ‘e he ngaahi pangikē ki he Pule’anga΄ ‘i he kaha’u vave mai΄, makatu‘unga mei he ngaahi pa’anga tokoni fakapatiseti mo e tokoni ki he Pule’anga΄ ‘a ia ‘oku ‘amanaki ‘e hū mai΄, kae pehē foki ki he toe lelei ange ‘a e tānaki pa’anga hū mai ‘a e Pule’anga΄. ‘E kei hokohoko atu ai pē ‘a hono muimui’i ‘e he Pangikē Pule΄ ‘a e felāve’i ‘a e ngaahi tu‘utu‘uni ngāue ‘a e Pule‘anga΄ mo e ngaahi ta‘umu‘a ngāue fakapa‘anga΄.

 Koe‘uhi΄ ko e fakafiemālie ‘a e ngaahi fakalakalaka ki mui ni΄ pea mo e fakafuofua ki he kaha’u΄, ‘e kei hokohoko atu ai pē ‘a hono ngāue‘aki ‘a e ngaahi fokotu‘utu‘u ngāue fakapa‘anga lolotonga΄. ‘E kei hoko atu pē hono ngāue‘aki ‘e he Pangikē Pule´ ‘a e ngaahi fokotu’utu’u ngāue fakapa’anga lolotonga΄, ki hono faka‘ai‘ai e ngāue’aki ‘a e hulu ‘i he pa’anga ngāue ‘a e ngaahi pangikē ke toe fakalahi ‘a e ngaahi nō ‘oku tuku atu΄, kae tautefito ki he ngaahi sekitoa ‘oku tupu΄, koe‘uhi΄ ke poupou ki he tupu faka‘ekonōmika fakalotofonua΄, ngaahi ngāue langa hake mei he saikolone Gita, pea mo fakamālohi’i ‘a e ma’uma’uluta ‘o e ngaahi fokotu‘utu‘u ngāue fakapa’anga΄. ‘Ikai ke ngata ai΄, kā ‘oku kei hokohoko atu ai pē ‘a e tokanga ‘a e Pangikē Pule´ ki hono 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, ki hono tauhi e ma‘uma‘uluta ‘a e tu‘unga fakapa‘anga΄, pea mo langa hake ha sisitemi fakapa’anga ‘oku malu mo lelei ki he tupu faka‘ekonōmika ‘a e fonua΄.