Journal Issue
Share
Article

Tonga: Selected Issues and Statistical Appendix

Author(s):
International Monetary Fund
Published Date:
August 2007
Share
  • ShareShare
Show Summary Details

II. Rising Household Indebtedness in Tonga9

A. Introduction

16. Tonga household debt has grown rapidly in recent years. Credit to the household sector has doubled over the last five years. The increase has been a widespread phenomenon; debt has risen across and permeated all income groups in Tonga. As a result, Tonga’s level of household debt—expressed as a share of GDP and in percentage of total private sector credit—became substantially higher than those of other small open economies. As the household sector holds two thirds of total financial sector credit, a central economic debate of the day is whether the rising and unprecedented level of debt borne by the household sector should be a cause for concern.

17. While rising household indebtedness is not necessarily a problem in itself if it simply reflects intertemporal tradeoffs by households to smooth their consumption over time, risk are present. Most macro-prudential indicators for the household sector do not point to an alarming level of debt or deterioration of household credit quality10. However, higher leverage makes household consumption and ability to service debt become more sensitive to adverse income and interest rate shocks. As such, the issue has important and wide-ranging implications on five tiers: household financial health, financial sector stability, the macro-economy, the integrity of the social fabric, and the appropriate responses of policy makers.

Financial Sector Cumulative Loans Outstanding

(end of period in percent of GDP)

Source: NRBT, Fund staff calculations

18. This paper poses the following four key questions. First, how leveraged are households in Tonga? Second, what are the causes of rising household debt? Third, what are the implications for financial sector stability and macroeconomic performance? And finally, what actions must policy-makers take to maintain stability and growth in the face of rising household debt.

19. The lack of microeconomic-level data severely limits household vulnerability analysis. Identifying the attendant risk of debt to households requires data at the household or individual levels which are not available. Admittedly, analyzing the policy implications would require extensive studies, including stress testing and simulation of the macroeconomic model with a financial sector module, which are beyond the scope of this paper.

B. Growth in Household Credit and Balance Sheet Effects

20. Credit to the household sector has hit a record high over the last five years, triggering strong monetary tightening11. Household credit has gathered pace since 2001 and reached its full speed at 30-40 percent annual growth in 2005. The strong surge in mortgage loans fueled activity in the real estate sector, which was further supported by improved consumer confidence.12 In January 2006, the National Reserve Bank of Tonga (NRBT) imposed credit ceilings on individual banks against the backdrop of a strong fiscal expansion and a downward pressure on foreign reserves, effectively putting a stop to an unsustainable credit growth. In the wake of the civil unrest in November 2006, the ceilings were shortly lifted in February 2007 to support reconstruction activities.

Total household loans and advances outstanding

(end of period in millions of pa’anga)

Source: NRBT, Fund staff calculations

21. By international comparison, Tonga’s household debt appears to be relatively large.13 Tonga’s household credit in relation to GDP has risen rapidly and peaked at 40½ percent in 2005, substantially higher than that of most developing economies.14 The credit growth rates in Tonga have been particularly high from an already high level of 22.4 percent of GDP in 2001; the annual growth rate of household debt further escalated to 27.2 percent in 2004-05. Unlike Latin America and Emerging Europe which also experienced recent credit surge, the high levels of household credit to GDP in Tonga reflect a substantial share of private sector credit allocated to households. In addition, housing loans accounted for a large share of total household credit, suggesting that households may have diminished flexibility in coping with unanticipated shocks.

Household creditShare of

Household credit in

total private sector

credit
Share of Housing

Loans in Total

Household Credit
Average Annual

Growth of Real

Household Credit,

2000-05
Average Annual

Growth of Real

Household Credit,

2004-05
As of end-2005(in percent of GDP)(in percent of total private sector credit)(in percent)(in percent)(in percent)
Tonga40.568.960.413.527.2
Emerging Asia27.531.454.222.613.8
Latin America9.235.737.58.934.5
Emerging Europe12.138.927.947.746.6
Mature markets58.041.577.58.910.2
Average all countries29.237.552.921.024.8
Source: Global Financial Stability Report, September 2006
Source: Global Financial Stability Report, September 2006

22. The majority of Tongan households borrow from commercial bank while reliance on non-monetary financial institutions has substantially declined. In 2000/01, credit from non-monetary financial institutions accounted for slightly above 40 percent of total household outstanding loans; the figure has since dropped by half in 2005/06 due largely to increased financial access. However, it is worth noting that the growing reliance on commercial bank credit does not preclude the possibility that there may yet be a significant share of households without financial access to either banks or non-banks channels. It seems likely that there remains a significant portion of households which has not benefited from greater access to formal credit, particularly those without steady income; and that some groups of households are more dependent on non-bank credit sources than others.15

23. More than three quarters of total credit to households is used for asset accumulation or business loans. Mortgage loans, accounted for the biggest share, jumped from an already high level of 51 percent in 2000-01 to 61 percent in 2005-06. Farm and small non-farm businesses have lost their shares accordingly by 15 percent combined over the last five years. Nonetheless, the share of asset accumulation and business loans has shrunk over time, reflecting an increase in consumer loans from 17 percent over 2000-01 to 24 percent over 2005-06.

AgricultureIndustryHousingVehiclesConsumer LoansHousehold total
Average 00–0115%13%51%4%17%100%
Average 05–069%4%61%2%24%100%
Source: NRBT Quarterly Bulletins; and Fund staff calculations
Source: NRBT Quarterly Bulletins; and Fund staff calculations

24. The fall in household business borrowing does not necessarily paint a worrisome picture. Some households with high business potential which in the past could borrow only from Tonga Development Bank can now access financing from commercial banks. Hence, credit to these household business is now counted as corporate borrowing whereas they were categorized as household borrowing.

25. The household sector at present shows no sign of deteriorating ability to service debt. Overall credit quality continued to improve for its record low at 10 percent of total loan in 2003. The figure depicts recent development of the ratio of non-performing loans (NPLs), defined as loans with at least 3 months of non-payment, over outstanding household loans extended by commercial banks and the development bank. The NPL rates for housing and personal loans compare well against other loan type and with international standard. On the other hand, high rates for business loans which consist of both corporate and household borrowing indicate poor credit quality. Because mortgage loans accounted for a sizeable share of total credit, the overall NPL rates remain at low levels. Looking at these numbers, one is inclined to conclude that the household credit quality is currently of no concern.

26. Nevertheless, there are problems with relying too much on the nonperforming loans or delinquency rates as warning signs for problems in household’s credit quality. First, the recent decline in NPL ratios could be attributed to the rapid growth of household credit in recent years as much as to the reduction in the amount of NPLs themselves. Second, given the recent surge in household credit, the nonpayment should not increase significantly after only one or two years of borrowing especially during current period of relatively favorable macroeconomic conditions and credit access. In any case, NPLs will probably not start to show significant increases until a few years after the initial borrowing. In addition, NPL ratios are subject to certain delay in reporting and thus could at best serve as a lagging indicator of household credit quality.

NPL Ratio

(by loan type for the overall financial system)

Source: NRBT, Fund staff calculations

C. Understanding the Causes of Household Debt Increase

27. Within the framework of the life-cycle hypothesis, the paper finds that Tonga’s relatively young demographic distribution tends to be associated with higher level of aggregate household debt. The life-cycle models thus draw a link between age and indebtedness: a young household must borrow against future income in order to reach its desire consumption level. Examining Tonga’s age distribution, one sees that Tonga currently has a population distribution that is not uniform but acutely skewed towards the younger ages. As these cohorts of younger households age, their debt burden will grow; so will the share of households within age brackets associated with high debt. If the Tongan population’s fertility rate remains stable at a medium rate as forecast by the Tongan Department of Statistics, aggregate household debt will grow purely as a result of demographic change in the near future, taking into account the continued trend of out-migration.

Demographic Distribution

(by age cohort)

Source: Tongan Department of Statistics

28. Household indebtedness appears to rise with improved confidence on income and job prospects. Continued expansion of economic growth over the last decade, characterized by low unemployment and rising income per capita, has restored consumer confidence. One fifth of average household income comes from overseas remittances, which had increased by 25 percent annually from 2000 to 2004. With renewed confidence in income and job prospects, households might have borrowed more in line with their higher expectation of future income in the early periods to reach a more stable path of consumption. In fact, many households decided to take out loans to purchase assets such as housing, automobiles and household appliances, some demand of which may have been delayed since the slow growth period in the early 1990s.

Real GDP per Capita

(Index 1990=100, 1990–2006)

Source: Authorities data and Fund staff estimates

Household Debt and Gross Overseas Remittances

Source: NRBT Quarterly Bulletins

29. The effect of changes in real interest rates on net aggregate indebtedness is theoretically ambiguous, so as in Tonga. The overall impact of relative magnitude of substitution and income effects is different across households depending on their stages of the life-cycle. Hence, younger households with prospect of higher future labor income are more likely to be attracted to borrow more by lower interest rates, whereas older households with accumulated wealth will be more likely to be affected by lower return on their assets and thus less likely to borrow. In Tonga where the majority of households are young, mortgage loans expanded rapidly over 2004-05, averaging over 40 percent growth annually. Evidence shows a strong negative correlation between mortgage loans and levels of nominal interest rates to residential homes, except in 2006 when credit ceilings were imposed. On the other hand, the relationship between housing loans and real interest rates remains ambiguous. During the housing loan surge in 2004-05, minimum mortgage rates—particularly for owner-occupied housing—remained stable despite declining inflation.

Lending Interest Rates: Mortgage

Source: NRBT

30. On the supply side, anecdotal evidence shows that credit constraints have eased for young households in Tonga. The relaxing of credit constraints has been brought about by an increase in the supply of funds for household loans and an improvement in the efficiency of the household loans market.16 In the case of decisions to purchase housing, which is the largest single expenditure among household loans, most financial institutions will require some down payments as well as evidence of steady income prospects. Young households with small savings and initial uncertain income path will therefore not be able to take out mortgage loans. As their income and savings grow, their liquidity constraints will be gradually eased, and thus be able to borrow enough to buy the houses. This would contribute to the hump-shaped pattern of household debt and home ownership over the life cycle that is observed in many countries. From interviews with bank officials, young households have a higher degree of financial access to mortgage loans.

31. Sharply higher liquidity within commercial banks in 2004 has proven to be a boon to households in search of credit. In a loanable funds market that has traditionally favored the corporate sector, increased liquidity as a result of Shoreline refinancing in June 2004 provided banks with a larger pool of potential funds from which to lend. It is possible that banks may give up lending to the corporate sector, channeling their effort instead towards the household sector, especially mortgages and consumer loans. In addition, the government policy of encouraging the development bank to extend credit to households had proven effective in the past; households in remote islands that historically had difficulty in accessing credit have been served.17

32. The rise in household indebtedness may be overstated by a statistical problem. It is possible that households with high business potential had borrowed from the informal sector in the past; and consequently their loans were not captured in the statistics. Over the years, these households have developed their credit history such that they can now borrow from banks.

D. Implications for Financial System Stability

33. Despite a high growth rate, household credit is unlikely to pose serious problems to financial stability. At present, there is no obvious sign of quality deterioration of household credit as the NPL rates for household loans are declining. Though remaining relatively high by international standard, NPLs have been adequately provisioned. The capital adequacy ratio for commercial banks and finance companies remains solid with the BIS ratio being more than 16 percent18. Although bank’ exposure to the household sector is substantial, with all household loans accounting for around 62 percent of total outstanding loans, the bulk of household credit is mortgage, which offers relatively good collateral values for financial institutions in case of loan defaults. The personal loans—accounted for a quarter of total household loans—are strongly secured by salary-deduction arrangement.

34. Regardless of whether households have borrowed excessively or not, increased household indebtedness has a number of important macroeconomic implications. The paper outlines some of the key implications of rising household debt in Tonga, which should be taken into considerations by policy makers and market participants alike.

35. The increasing trend of debt-to-income ratios implies that Tongan household’s consumption will become more sensitive to future changes in interest rates, income and asset prices. As household’s indebtedness increases, its debt service will rise, resulting in lower free income—defined as total household income less necessary and pre-committed expenditures (such as debt services). If households were to experience shocks, such as rising interest rates, they would have to pay more to service debt and thus have smaller amount of income to consume other goods, compared to the case where they were debt-free. In the case of Tonga, those with mortgage loans will be vulnerable to rising interest rates as most mortgages are variable rate loans. The risks will be especially great if households were drawn to the low borrowing rate and increase the size of the mortgage excessively without properly taking into account the likely increase in interest rates and debt services that may follow.

36. The distribution of debt matters in determining the impacts of higher level of debt on the economy. For example, newer entrants into the labor force or lower income earners are more prone to unemployment. If these groups happen to have high debt burden, they face high risk of becoming unemployed and experiencing severe financial stress in the future. Another example has to do with rising interest rate and the different impacts it has on net borrowers and net lenders. For net borrowers, the impact will be lower consumption; for net lenders, increase in interest rate will boost the return on their wealth. The aggregate impact will then depend critically on the distribution of debt and assets across the household sector as well as the different marginal propensity to consume across household groups.

37. If low-income households have relatively high debt burden, the sensitivity of the economy to interest rate changes will escalate. In general, low income groups are more vulnerable to changes in interest rates because they may have fewer resources to smooth their consumption. Although low-income groups may have lower nominal levels of consumption than high-income groups, the higher marginal propensity to consume among the low-income groups mean their impact to the economy is still important. The impact also could be relevant in terms of changes in consumption patterns with low-income groups accounting relatively more on necessary items such as food.

38. More prudential measures should be implemented in response to recent unfavorable economic conditions. Recent developments in monetary stance, which include lifting credit ceilings and lowering reserve requirement in February 2007, potentially lead to a surge in household lending instead of the intended corporate sector. If the reported drop in remittances is confirmed, banks should be more cautious in using overseas remittances as a determinant for consumer loan size. Although it is too soon to realize full impact of the November riot on asset quality or household difficulties in servicing debt, the NRBT must strengthen their supervisory efforts that will augment quality of loan decision while not precluding access to debt. Given an expected growth pick-up in consumer credit and mortgages, it is important that attention is paid to establish the necessary setting for a highly efficient consumer credit market in the long run. Priorities include improving data collection and the greater sharing of consumer credit information among financial institutions, raising financial literacy and personal finance skills among consumers, and building a national database on household balance sheets.

Table 1.Tonga: Real Gross Domestic Product by Sector of Origin, 1999/00–2005/06 1/(In 2000/01 prices)
1999/002000/012001/022002/032003/042004/052005/06
Prel.
Primary sector(In millions of pa’anga)
Agriculture, forestry, and fisheries64.064.766.869.367.065.064.7
Secondary sector38.438.940.841.841.445.445.4
Mining and quarrying0.90.91.01.11.11.21.2
Manufacturing11.411.512.212.212.913.113.1
Electricity and water4.54.64.85.15.45.96.1
Construction21.621.822.823.522.025.325.0
Tertiary sector123.5128.1130.9135.1141.2145.1148.8
Commerce, restaurants, and hotels33.934.036.237.640.742.143.8
Transportation and communications17.620.319.720.821.421.822.5
Finance and real estate25.426.026.127.228.530.031.0
Government services31.131.932.632.834.334.734.8
Entertainment and private services13.814.014.314.514.715.015.3
Ownership of dwellings10.010.110.210.410.510.610.8
Less: Imputed bank service charge-8.2-8.2-8.2-8.1-8.9-9.2-9.5
Total GDP at factor costs225.9231.6238.5246.2249.6255.4258.9
Net indirect taxes43.144.245.647.047.748.849.5
Total GDP at constant market prices269.1275.8284.1293.2297.3304.2308.4
(Percent change)
Primary sector
Agriculture, forestry, and fisheries5.71.03.33.7-3.3-3.0-0.5
Secondary sector-0.41.25.12.3-1.09.70.0
Mining and quarrying-9.710.09.42.53.28.0-0.8
Manufacturing-5.80.96.10.05.51.60.0
Electricity and water9.03.22.66.07.28.05.0
Construction1.20.75.02.7-6.415.0-1.1
Tertiary sector7.23.72.23.24.52.72.6
Commerce, restaurants, and hotels17.80.36.54.08.33.54.0
Transportation and communications5.515.2-2.85.43.02.03.0
Finance and real estate5.12.40.44.24.75.23.6
Government services2.82.72.00.64.71.00.5
Entertainment and private services1.81.81.71.71.71.82.0
Ownership of dwellings1.31.31.31.31.31.41.4
Less: Imputed bank service charge2.20.8-0.9-0.710.13.03.0
Total GDP at factor costs5.42.53.03.21.42.31.4
Net indirect taxes5.42.63.03.21.42.31.3
Total GDP at constant market prices5.42.53.03.21.42.31.4
Memorandum items:
GDP deflator0.23.89.48.95.09.77.0
GDP at current market prices5.66.512.712.46.412.28.4
Source: Data provided by the Tongan authorities.

Fiscal year begins in July.

Source: Data provided by the Tongan authorities.

Fiscal year begins in July.

Table 2.Tonga: Agricultural Products Marketed in Tonga, 1999/00–2005/06 1/(1987/88=100)
1999/002000/012001/022002/032003/042004/052005/06
(12–month percent change)
Values
Total-28.0-48.627.441.2-8.1-13.523.1
Root crops-33.3-56.622.1-18.635.99.515.4
Coconuts-0.9-17.238.4-46.6-5.5-13.780.4
Bananas-24.9-55.043.12.125.75.0-7.8
Watermelon-7.3-37.743.9-53.4123.0-31.968.2
Other fruit-40.4-80.2229.189.0-14.9-34.7-11.7
Vegetables-26.6-30.80.6394.3-49.8-28.417.7
Miscellaneous-47.3-53.7-82.53,381.823.5-41.2-28.1
Volumes
Total14.1-54.822.4-16.4-13.4-0.111.3
Root crops20.7-64.90.8-24.06.320.91.7
Coconuts-14.7-9.2108.6-68.8-27.35.924.8
Bananas35.9-60.440.7-25.334.324.8-21.4
Watermelon31.2-41.12.6-57.5136.8-35.669.5
Other fruit-37.8-65.1154.693.4-50.620.9-42.9
Vegetables-1.6-43.1-15.1354.1-63.0-28.79.7
Miscellaneous-16.8-87.3-81.51,200.0-26.2-47.9-28.0
Unit values
Total-22.615.7137.4-16.734.70.811.0
Root crops-45.75.340.021.414.7-7.711.1
Coconuts18.20.0-23.140.028.6-16.746.7
Bananas-31.8-13.315.430.0-10.3-8.612.5
Watermelon-25.70.034.611.40.05.112.2
Other fruit-1.6-11.5-16.720.035.2-24.720.0
Vegetables-11.9-9.636.245.38.61.012.7
Miscellaneous-44.9192.6427.8-40.059.68.37.6
Sources: Data provided by the Tongan authorities; and Statistical Bulletin Tables D2, D3, and D4.

Data reflect agricultural products sold in Talamahu market.

Sources: Data provided by the Tongan authorities; and Statistical Bulletin Tables D2, D3, and D4.

Data reflect agricultural products sold in Talamahu market.

Table 3.Tonga: Indicators of Economic Activity, 1999/00–2005/06
1999/002000/012001/022002/032003/042004/052005/06
Electricity consumed (thousand kw)32,12733,84436,17635,90738,74141,04446,002
Cement imports (million tons)12,53310,28811,92914,68212,36421,74510,363
New registrations of motor vehicles (number)1,8111,9402,0072,0931,9872,0152,486
Retail petrol prices (seniti, end of period)1 03117110115151172222
Electricity prices (seniti, end of period)27.037.537.545.545.556.556.5
(12–month percent change)
Electricity consumed9.15.36.9-0.77.95.912.1
Cement imports35.4-17.916.023.1-15.875.9-52.3
New registrations of motor vehicles36.57.13.54.3-5.11.423.4
Retail petrol prices65.913.8-6.65.031.113.929.3
Electricity prices0.038.90.021.30.024.20.0
Source: Data provided by the Tongan authorities.
Source: Data provided by the Tongan authorities.
Table 4.Tonga: Tourism Statistics, 1999/00–2005/06
1998/991999/002000/012001/022002/032003/042004/052005/06
Number of air arrivals27,70933,86833,72234,91838,04440,25940,13141,890
(Percent change)4.122.2-0.43.59.05.8-0.34.4
Country of origin
Australia4,7516,0455,4535,9896,8858,5477,4338,930
New Zealand8,71810,08810,67412,61113,55515,02316,89517,215
United States5,3416,9227,0536,9727,4647,7377,4597,865
Pacific Islands2,7463,0612,7973,2173,6272,4552,1952,380
Other6,1537,7527,7456,1296,5106,4976,1495,500
Country of origin (in percent of total)
Australia17.117.816.217.218.121.218.521.3
New Zealand31.529.831.736.135.637.342.141.1
United States19.320.420.920.019.619.218.618.8
Pacific Islands9.99.08.39.29.56.15.55.7
Other22.222.923.017.617.116.115.313.1
Arrivals on cruise ships 1/5,7375,1514,9765,7536,5033,30911,8056,524
Total arrivals 2/33,44639,01938,69840,67144,54743,56851,93648,414
(Percent change)3.316.7-0.85.19.5-2.219.2-6.8
Tourism receipts (in millions of pa’anga) 3/13.016.512.712.425.730.424.427.7
Average expenditure per visitor (in pa’anga) 3/389423328304576698470572
(Percent change)-11.28.7-22.5-7.389.521.2-32.621.6
Source: Data provided by the Tongan authorities.

Including passengers and crew members.

Sum of air passengers and cruise passengers, except for 2003/04.

Data from Overseas Exchange Transaction (OET) records.

Source: Data provided by the Tongan authorities.

Including passengers and crew members.

Sum of air passengers and cruise passengers, except for 2003/04.

Data from Overseas Exchange Transaction (OET) records.

Table 5.Tonga: Consumer Price Index, 1999/00–2005/06(Annual average)
Weights 1/1999/002000/012001/022002/032003/042004/052005/06
(November 2002 =100)
Total100.078.083.792.1101.9113.9125.2135.0
Local component33.883.289.395.8103.3108.9122.4137.5
Imported component66.274.079.389.2100.9116.4126.6133.6
Food44.474.378.291.7102.9112.7120.9126.4
Housing5.391.893.598.799.6103.8115.3131.8
Household goods12.079.683.790.0100.9110.5121.4136.0
Clothing and footwear3.479.780.883.897.4101.1112.5125.1
Transportation14.276.690.992.7101.1109.1128.5151.4
Tobacco and alcohol12.379.893.795.9103.3140.9156.4157.3
Miscellaneous8.486.690.193.4100.6104.7113.3123.9
(Percent change)
Total...4.97.310.010.711.89.97.8
Local component...-0.27.37.37.85.412.412.3
Imported component...10.07.212.513.115.48.85.5
Food...0.35.217.312.39.57.24.6
Housing...11.411.411.411.411.411.411.4
Household goods...11.311.311.311.311.311.311.3
Clothing and footwear...9.09.09.09.09.09.09.0
Transportation...15.115.115.115.115.115.115.1
Tobacco and alcohol...0.50.50.50.50.50.50.5
Miscellaneous...7.27.27.27.27.27.27.2
Source: Data provided by the Tongan authorities.

Revised on 2002 basis.

Source: Data provided by the Tongan authorities.

Revised on 2002 basis.

Table 6.Tonga: Population and Labor Market, 1999–2006
19992000200120022003200420052006
Est.
Total population99,819100,281100,673101,002101,405101,865102,371101,134
Male50,73151,01751,27351,47451,71151,97552,26251,197
Female49,08849,26449,40049,52849,69449,89050,10949,937
Labor force90,370
Male45,720
Female44,650
Employed34,560
Male20,420
Female14,140
Full-time government workers4,319
(In percent of total employees)12
Participation rate63.6
Male74.6
Female52.7
Unemployment rate5.2
Source: Data provided by the Tongan authorities.
Source: Data provided by the Tongan authorities.
Table 7.Tonga: Central Government Revenue, 1999/00–2005/06
1999/002000/012001/022002/032003/042004/052005/06
Prel.
(In millions of pa’anga)
Total revenue and grants71.378.595.299.3111.0122.1154.5
Total revenue70.276.193.296.4105.9116.6144.6
Current revenue70.276.193.296.4105.9116.6144.6
Tax revenue52.654.674.580.786.198.4122.2
Taxes on income profits and capital gains10.510.015.615.516.320.626.9
Taxes on property0.10.10.10.10.10.10.0
Domestic taxes on goods and services7.68.310.010.912.021.452.7
Sales tax6.06.27.68.19.018.750.8
Other taxes1.62.12.32.93.02.81.9
Taxes on international trade and transactions34.235.848.553.857.255.641.9
Other taxes0.30.40.40.50.50.70.7
Nontax revenue17.621.518.715.719.718.222.4
Entrepreneurial and property income4.86.75.12.97.13.75.6
Administrative fees and charges12.010.812.811.512.213.513.0
Of which: Revolving funds3.73.04.33.53.15.44.9
Fines and forfeits0.40.20.30.30.30.30.3
Other nontax revenue0.53.80.40.90.20.63.5
Capital revenue0.00.00.00.00.00.00.0
Grants (in cash)1.12.42.02.95.25.59.9
(In percent of GDP)
Total revenue and grants27.528.530.628.429.929.234.1
Total revenue27.127.630.027.628.527.931.9
Current revenue27.127.630.027.628.527.931.9
Tax revenue20.319.824.023.123.223.627.0
Taxes on income profits and capital gains4.03.65.04.44.44.95.9
Taxes on property0.00.00.00.00.00.00.0
Domestic taxes on goods and services2.93.03.23.13.25.111.6
Sales tax2.32.32.52.32.44.511.2
Other taxes0.60.70.80.80.80.70.4
Taxes on international trade and transactions13.213.015.615.415.413.39.3
Other taxes0.10.10.10.10.10.20.2
Nontax revenue6.87.86.04.55.34.44.9
Entrepreneurial and property income1.92.41.70.81.90.91.2
Administrative fees and charges4.63.94.13.33.33.22.9
Of which: Revolving funds1.41.11.41.00.81.31.1
Fines and forfeits0.10.10.10.10.10.10.1
Other nontax revenue0.21.40.10.20.00.20.8
Capital revenue0.00.00.00.00.00.00.0
Grants (in cash)0.40.90.70.81.41.32.2
Memorandum item:
GDP (nominal, in millions of pa’anga)259.1275.8310.8349.4371.9417.3452.6
Source: Data provided by the Tongan authorities.
Source: Data provided by the Tongan authorities.
Table 8.Tonga: Central Government Current Expenditure by Economic Classification, 1999/00–2005/06
1999/002000/012001/022002/032003/042004/052005/06
Prel.
(In millions of pa’anga)
Total expenditure and lending minus repayments72.282.999.3109.8107.7111.6169.4
Total expenditure73.977.598.7100.3108.7112.6170.6
Current expenditure70.670.881.691.3101.7107.9167.0
Wages and salaries37.039.944.044.345.749.790.8
Employer contributions2.01.71.51.52.63.8
Other purchases of goods and services24.521.026.832.136.740.247.6
Interest payments1.81.72.32.33.23.83.3
Subsidies and other current transfers7.36.15.88.910.49.410.7
Subsidies to nonfinancial public enterprises0.00.10.32.41.81.10.3
Subsidies to financial institutions0.50.10.00.10.10.30.0
Transfers to nonprofit institutions2.62.41.61.72.12.23.9
Transfers to households3.22.72.82.62.83.04.7
Transfers abroad0.90.81.21.40.81.11.3
Transfers to other enterprises0.62.71.80.5
Transfer value1.02.24.12.110.7
Other expenditures 1/3.86.90.43.10.5-1.0
Capital expenditure3.32.910.28.63.94.34.6
Acquisition of fixed capital assets1.92.29.27.63.73.43.6
Purchases of land and intangible assets0.90.10.10.40.10.20.1
Capital transfers0.50.60.90.60.10.70.9
Lending minus repayments-1.75.40.69.5-0.9-1.1-1.2
Domestic-1.75.40.69.5-0.9-1.1-1.2
To non-financial public enterprises-0.86.90.310.70.50.30.0
To financial institutions-0.9-1.50.3-1.2-1.5-1.3-1.2
Abroad0.00.00.00.00.00.00.0
(In percent of GDP)
Total expenditure and lending minus repayments27.930.132.031.429.026.737.4
Total expenditure28.528.131.828.729.227.037.7
Current expenditure27.225.726.326.127.325.836.9
Wages and salaries14.314.514.212.712.311.920.1
Employer contributions0.70.60.40.40.60.8
Other purchases of goods and services9.47.68.69.29.99.610.5
Interest payments0.70.60.70.70.90.90.7
Subsidies and other current transfers2.82.21.92.62.82.32.4
Subsidies to nonfinancial public enterprises0.00.00.10.70.50.30.1
Subsidies to financial institutions0.20.00.00.00.00.10.0
Transfers to nonprofit institutions1.00.90.50.50.60.50.9
Transfers to households1.21.00.90.80.80.71.0
Transfers abroad0.30.30.40.40.20.30.3
Transfers to other enterprises0.20.70.40.1
Transfer value0.30.61.10.52.4
Other expenditures1.42.20.10.80.1-0.2
Capital expenditure1.31.13.32.51.01.01.0
Acquisition of fixed capital assets0.70.83.02.21.00.80.8
Purchases of land and intangible assets0.40.00.00.10.00.00.0
Capital transfers0.20.20.30.20.00.20.2
Lending minus repayments-0.62.00.22.7-0.3-0.3-0.3
Domestic-0.62.00.22.7-0.3-0.3-0.3
To nonfinancial public enterprises-0.32.50.13.10.10.10.0
To financial institutions-0.3-0.50.1-0.3-0.4-0.3-0.3
Other domestic lending minus repayments0.00.00.00.00.00.00.0
Abroad0.00.00.00.00.00.00.0
Memorandum item:
GDP (nominal)259.1275.8310.8349.4371.9417.3452.6
Sources: Data provided by the Tongan authorities; and Fund staff estimates.

Estimated based on the difference between below and above the line data.

Sources: Data provided by the Tongan authorities; and Fund staff estimates.

Estimated based on the difference between below and above the line data.

Table 9.Tonga: National Debt Outstanding, 1999/00–2005/06
1999/002000/012001/022002/032003/042004/052005/06
(In millions of pa’anga; end of period)
Total debt126.0176.0202.4226.4224.6210.6217.3
Total domestic debt30.664.470.283.373.762.951.3
Bank loans0.00.01.06.05.11.02.4
Bonds on issue13.918.920.926.226.228.524.9
Government-guaranteed debt16.717.722.021.819.212.313.6
Retirement transfer preserved accounts27.826.329.323.221.110.4
Total external debt 1/95.4111.7132.2143.1150.9147.7166.0
Bilateral12.718.522.126.023.923.225.3
France0.00.00.00.00.00.00.0
Germany12.712.812.111.18.88.59.4
United Kingdom0.00.00.00.00.00.00.0
China0.05.710.014.915.114.715.9
Multilateral78.793.2110.1117.0127.0124.5140.7
Asian Development Bank59.672.287.189.397.391.398.4
European Investment Bank1.70.61.60.71.91.21.2
International Development Association7.08.28.613.815.320.428.9
International Fund for Agricultural Development10.412.212.813.212.511.612.2
Commercial loans4.00.00.00.00.00.00.0
(In millions of U.S. dollars; end of period)
Total debt74.781.894.0105.4112.2108.9105.5
Total domestic debt18.129.932.638.836.832.524.9
Total external debt 1/56.551.961.466.675.476.480.6
(In percent of GDP; end of period)
Total debt47.257.865.966.261.750.646.8
Total domestic debt11.521.122.924.420.315.111.0
Total external debt 1/35.736.743.141.841.535.535.8
Memorandum items:
Pa’anga per U.S. dollar (end of period)1.72.22.22.12.01.92.1
GDP (in millions of U.S. dollar)158.1141.6142.6159.2181.8215.3225.3
Source: Data provided by the Tongan authorities.

Includes government and government-guaranteed debt.

Source: Data provided by the Tongan authorities.

Includes government and government-guaranteed debt.

Table 10.Tonga: Tonga Trust Fund, 1999/00–2005/06(In millions of pa’anga)
1999/002000/022002/032003/042004/052005/06
Prel.
Opening balance52.062.96.91.70.11.8
Proceeds3.91.50.20.01.82.7
Local collections and other0.10.40.10.00.00.0
Overseas collections and interest earned3.81.10.10.01.82.7
Tongasat0.00.00.00.00.00.0
Drawdown3.245.65.51.60.10.1
Advances to government of Tonga1.02.10.40.10.00.0
Other expenditure2.243.55.11.50.10.1
Prior year adjustments 2/-9.9
Revaluation adjustment10.2-2.00.20.00.00.0
Closing balance62.96.91.70.11.82.7
Invested overseas 3/46.50.01.70.01.82.7
Deposited in Tonga1.20.40.00.10.00.0
Unclassified15.26.50.00.00.00.0
Source: Data provided by the Tongan authorities.

Auditing accounts combine 2000/01 and 2001/02 into 2000/02.

The adjustments are made to the cash account to reflect the revaluation adjustments from previous years and the loss stemming from the liquidation of the U.S. investments in 2002.

Investments overseas declined to zero in 2000/01 due to mismanagement.

Source: Data provided by the Tongan authorities.

Auditing accounts combine 2000/01 and 2001/02 into 2000/02.

The adjustments are made to the cash account to reflect the revaluation adjustments from previous years and the loss stemming from the liquidation of the U.S. investments in 2002.

Investments overseas declined to zero in 2000/01 due to mismanagement.

Table 11.Tonga: Public Sector Enterprises(As of March 2007)
GovernmentTurnover
ownershiplatest year
Organization(percent)(T$ million)Comments
Companies
International Dateline Hotel (IDH)1000.1Holding Janfull International Dateline Hotel (49%).
Leiola Duty Free753.0In the process of privatization.
Sea Star Fishing Company Limited701.5In the process of privatization.
Shipping Corporation of Polynesia Limited1001.7
Domestic
Fua KavengaSold in 2006
Management coy
Tonga Communications Corporation10020.8International & domestic telecommunications
Tongan Corporation1000.1
Tonga Investment Limited (TIL)1005.7In the process of privatization.
Frisco Hardware Limited
Homegas Limited
Primary Produce Export Limited
Tongatapu Machinery Pool Limited1001.3
Tonga Timber Limited100n.a.
Statutory Bodies
Tonga Broadcasting Commission1001.7Provides broadcasting services.
Tonga Electric Power Board1000.5Regulates the power sector.
Tonga Ports Authority1003.2Operates and manages ports.
Tonga Water Board1002.9Operates and manages water supply.
Banks
Tonga Development Bank1006.1
Westpac Bank of Tonga40na
Trading Activities
Export Produce Treatment Services Ltd. (MAF)100
Machinery Pool (MAF)100
Quarries (MOW)100
Printing Department (PMO)1000.769Corporatized in January 2005
Small Industries Centre (MLCI)100
Survey Operations (MLSNR)100
Talamahu Market (MAF)100
Tonga Post Office (MOF)100Proposed corporatization in July 2005
Government Store100
Source: Data provided by the Tongan authorities.
Source: Data provided by the Tongan authorities.
Table 12.Tonga: Monetary Survey, 1999/00–2005/06
1999/002000/012001/022002/032003/042004/052005/06
(In millions of pa’anga; end of period)
Net foreign assets26.932.833.531.385.677.272.6
Foreign assets32.046.544.649.2109.391.895.0
Foreign liabilities-5.1-13.8-11.1-17.9-23.8-14.6-22.5
Net domestic assets70.390.399.1119.292.8122.9154.9
Net domestic credits89.2119.1130.2151.3131.8165.5213.5
Government0.84.3-5.61.6-10.7-26.3-19.1
Non-financial public enterprises2.35.49.512.211.16.43.9
Private sector86.5107.9125.2138.6133.4189.9233.8
Non-monetary financial institutions 1/-0.31.51.2-1.1-1.9-4.5-5.2
Other items (net)-18.9-28.8-31.1-32.2-39.1-42.6-58.6
Total domestic liquidity (M2)97.2123.0132.7150.5178.5200.1228.9
Narrow money (M1)27.833.042.451.665.868.755.7
Currency outside banks8.010.411.912.915.214.917.1
Demand deposits19.822.630.438.850.653.838.6
Quasi money69.490.090.398.9112.7131.4173.2
Savings deposits24.631.236.836.734.838.153.2
Foreign currency accounts4.016.36.815.213.58.111.8
(12–month percent change)
Net foreign assets-21.821.82.3-6.6173.3-9.8-6.0
Foreign assets-19.345.4-4.210.3122.3-16.03.5
Foreign liabilities-3.3169.6-19.761.633.0-38.553.8
Net domestic assets27.128.49.820.2-22.132.526.0
Private sector7.024.816.010.7-3.842.423.2
Total domestic liquidity (M2)8.426.67.813.418.612.114.4
Narrow money (M1)12.718.728.421.927.54.4-18.9
Quasi money6.729.80.39.514.016.631.8
(In millions of U.S. dollars; end of period)
Net foreign assets15.915.215.614.642.739.935.2
Foreign assets19.021.620.722.954.647.546.1
Foreign liabilities-3.0-6.4-5.1-8.3-11.9-7.6-10.9
Memorandum items:
Velocity (GDP/average M2)2.72.22.32.32.12.12.0
Exchange rate (pa’anga per U.S. dollar; end period1.72.22.22.12.01.92.1
Sources: National Reserve Bank of Tonga; and Fund staff estimates.

Nonmonetary financial institutions (NMFI) include TDB and TTF.

Sources: National Reserve Bank of Tonga; and Fund staff estimates.

Nonmonetary financial institutions (NMFI) include TDB and TTF.

Table 13.Tonga: Accounts of the National Reserve Bank of Tonga, 1999/00–2005/06
1999/002000/012001/022002/032003/042004/052005/06
(In millions of pa’anga; end of period)
Net foreign assets25.825.439.336.788.978.976.1
Foreign assets26.225.839.636.989.782.183.2
Foreign liabilities-0.5-0.4-0.2-0.2-0.8-3.2-7.1
Net domestic assets-0.17.01.32.4-9.7-23.5-14.6
Net domestic credit0.210.20.11.1-13.2-25.0-11.3
Net claims on government0.21.4-3.5-2.7-13.2-25.0-11.3
Claims on government5.414.214.117.416.89.516.2
Deposits from government-5.2-12.8-17.6-20.1-30.0-34.5-27.6
Net claims on financial institution0.08.83.63.80.00.00.0
Other items (net)-0.3-3.21.21.23.51.5-3.3
Reserve money25.632.440.639.179.255.461.5
Currency on issue10.213.115.217.017.218.521.2
Required reserves12.518.320.521.125.830.128.2
Other bank deposits2.91.05.01.036.26.912.1
(In millions of U.S. dollars; end of period)
Net foreign assets15.311.818.317.144.440.836.9
Foreign assets15.612.018.417.244.842.540.4
Foreign liabilities-0.3-0.2-0.1-0.1-0.4-1.7-3.5
Memorandum items:
Money multiplier (M2/Reserve Money)3.83.83.33.82.33.63.7
Exchange rate (pa’anga per U.S. dollar; end period)1.72.22.22.12.01.92.1
Sources: National Reserve Bank of Tonga; and Fund staff estimates.
Sources: National Reserve Bank of Tonga; and Fund staff estimates.
Table 14.Tonga: Consolidated Accounts of Deposit Money Banks, 1999/00–2005/06(In millions of pa’anga; end of period)
1999/002000/012001/022002/032003/042004/052005/06
Net foreign assets1.07.3-5.8-5.4-3.4-1.7-3.5
Foreign assets5.720.75.012.219.69.711.8
Foreign liabilities-4.7-13.4-10.8-17.6-23.0-11.4-15.3
Net domestic assets92.7107.9127.8146.2168.5191.4219.1
Net domestic credit92.4119.2134.5157.1146.9195.0230.0
Net claims on government0.62.9-2.14.32.5-1.3-7.7
Claims on government9.68.69.210.310.08.63.3
Deposits from government-9.0-5.7-11.3-6.0-7.5-9.9-11.1
Claims on nonfinancial public entities2.35.49.512.211.16.43.9
Claims on private sector86.5107.9125.2138.6133.4189.9233.8
Claims on NMFI3.03.02.02.00.00.00.0
Other items (net)0.3-11.3-6.8-11.021.6-3.6-11.0
Of which:
Claims on central bank25.721.527.424.561.939.243.2
Reserves16.921.527.424.561.939.243.2
Cash in vault2.12.73.24.12.03.64.1
Deposits at NRBT14.818.824.220.459.935.637.6
NRBT Notes8.80.00.00.00.00.00.0
Capital and reserves-27.6-36.9-41.1-43.6-48.4-45.5-50.4
Total deposits93.8115.2121.9140.7165.2189.7217.0
Demand deposits24.137.936.853.362.259.849.7
Savings deposits24.631.236.836.935.138.353.8
Time deposits45.146.048.450.667.991.5113.5
Sources: National Reserve Bank of Tonga; and Fund staff estimates.
Sources: National Reserve Bank of Tonga; and Fund staff estimates.
Table 15.Tonga: Bank Credit by Sector, 1999/00–2005/06
1999/002000/012001/022002/032003/042004/052005/06
Commercial banks
(In millions of pa’anga; end of period)
Central government 1/0.50.10.14.93.72.41.4
Public enterprises2.35.49.512.211.16.43.9
Private sector86.4107.8125.2138.6133.3189.8233.7
Agriculture4.86.79.87.97.610.412.1
Industry and trade37.153.261.071.351.564.280.7
Housing28.433.634.041.746.481.6101.8
Personal13.613.420.317.627.733.338.8
Other2.40.90.20.10.10.30.4
Total89.2113.3134.7155.7148.1198.6239.1
(Percent change)
Private sector7.024.816.210.7-3.842.323.2
Agriculture77.238.746.6-18.9-4.637.716.2
Industry and trade21.643.614.616.9-27.724.525.7
Housing-10.518.41.022.611.475.924.8
Personal-11.0-1.851.5-13.357.420.116.6
Other406.0-65.1-82.4-21.38.5119.528.8
Total4.827.118.915.6-4.934.120.4
Tonga Development Bank
(In millions of pa’anga; end of period)
Central government2.01.60.21.21.27.64.7
Public enterprises1.11.00.80.32.22.21.4
Private sector34.333.937.444.641.937.044.2
Agriculture13.011.713.316.816.514.917.9
Industry and trade10.99.59.410.47.56.26.8
Other10.412.714.717.417.915.919.4
Total37.436.538.446.145.246.850.3
(Percent change)
Private sector-2.6-1.010.219.3-6.0-11.719.4
Agriculture-11.6-9.813.726.1-1.5-9.519.6
Industry and trade-14.9-13.0-1.211.2-28.1-17.610.8
Other34.822.515.318.22.9-11.322.6
Total-1.1-2.35.119.9-1.73.47.6
Source: National Reserve Bank of Tonga, Quarterly Bulletin, Table B6 and B7.

Excludes holdings of government securities.

Source: National Reserve Bank of Tonga, Quarterly Bulletin, Table B6 and B7.

Excludes holdings of government securities.

Table 16.Tonga: Accounts of the Tonga Development Bank, 1999/00–2005/06(In millions of pa’anga; end of period)
1999/002000/012001/022002/032003/042004/052005/06
Assets
Reserves1.31.52.22.42.12.45.9
Deposits at deposit money banks1.90.70.02.42.97.00.2
Domestic credits to non-financial sectors37.536.538.446.045.246.850.3
Government2.01.60.21.21.27.64.7
Non-financial public enterprises1.11.00.80.32.22.21.4
Private sector34.433.937.444.641.937.044.2
Other assets9.69.19.38.59.39.99.6
Liabilities and capital
Foreign borrowing 1/3.83.02.71.81.80.90.6
TDB bonds and notes11.612.414.622.621.926.520.4
Held by government3.52.23.03.34.96.44.6
Held by banks1.53.02.02.00.00.00.0
Held by others6.67.29.517.316.920.115.9
Government lending funds 2/14.812.610.49.47.66.86.1
Liabilities to deposit money banks0.70.31.01.42.03.68.6
Liabilities to NRBT0.00.00.00.00.00.00.0
Other liabilities10.59.47.78.78.89.09.3
Capital and reserves9.010.113.515.517.319.320.9
Sources: National Reserve Bank of Tonga; and Fund staff estimates.

Direct borrowing by NMFI from foreign sources. Some exchange risk is assumed by the government.

Represents borrowing by the government from foreign sources for onlending to NMFI. Exchange risk is assumed by the government.

Sources: National Reserve Bank of Tonga; and Fund staff estimates.

Direct borrowing by NMFI from foreign sources. Some exchange risk is assumed by the government.

Represents borrowing by the government from foreign sources for onlending to NMFI. Exchange risk is assumed by the government.

Table 17.Tonga: Interest Rate Structure, 1999/00–2005/06(In percent per annum; end of period)
1999/002000/012001/022002/032003/042004/052005/06
National Reserve Bank of Tonga (NRBT)
Minimum lending rate 1/9.09.012.012.012.012.012.0
Reserve Bank notes (3 months) 2/3.63.63.6
Reserve Bank notes (1 month) 2/3.53.53.55.0
Commercial bank deposits
Saving deposits3.23.13.13.23.23.33.2
Time deposits
3-months5.05.05.15.15.45.35.8
6-months5.45.45.55.55.85.86.2
12-months6.05.96.06.06.36.26.6
24-months6.26.26.36.36.66.36.7
36-months6.36.56.86.86.96.56.8
48-months7.26.77.07.07.06.46.8
Average rate on all savings and time deposits4.84.84.74.65.15.15.4
Commercial bank loans
Base rate 3/9.09.09.09.09.59.09.4
Personal housing10.010.510.510.410.410.310.8
Tonga Development Bank loans
Small-scale subsistence 4/10.510.510.510.510.510.511.5
High priority loans 5/10.510.510.510.010.010.011.0
Maximum rate16.516.516.516.516.515.515.5
Memorandum items:
Real interest rate 6/0.7-1.7-4.3-5.0-5.9-4.3-1.8
Spread lending and deposit rate 7/4.44.94.84.74.54.64.7
Reserve requirement 8/15.015.015.015.015.015.012.5
Sources: Data provided by the Tongan authorities; and Fund staff estimates.

Minimum lending rate was raised to 5.4 percent in June 1995 and to 7 percent in December 1995.

The NRBT notes were introduced in April 1993. Prior to that, the NRBT had long-term deposits from the BOT. The NRBT notes has been discontinued since March 2001.

Base rate is the lowest rate charged.

For loans to export-oriented industries, manufacturing and raw materials processing, and tourism activities except restaurants.

Loans less than T$1,000 for activity in agriculture, fisheries, and livestock.

Average rate for saving and time deposits minus average inflation.

Based on lending rate for personal housing and average rate on saving and deposit rate.

Statutory reserve requirements (introduced March 1993) were 5 percent and raised to 10 percent in December 1995, to 12 percent in September 1998, and to 15 percent in September 2000, reduced to 12.5 in March 2006. They are not remunerated.

Sources: Data provided by the Tongan authorities; and Fund staff estimates.

Minimum lending rate was raised to 5.4 percent in June 1995 and to 7 percent in December 1995.

The NRBT notes were introduced in April 1993. Prior to that, the NRBT had long-term deposits from the BOT. The NRBT notes has been discontinued since March 2001.

Base rate is the lowest rate charged.

For loans to export-oriented industries, manufacturing and raw materials processing, and tourism activities except restaurants.

Loans less than T$1,000 for activity in agriculture, fisheries, and livestock.

Average rate for saving and time deposits minus average inflation.

Based on lending rate for personal housing and average rate on saving and deposit rate.

Statutory reserve requirements (introduced March 1993) were 5 percent and raised to 10 percent in December 1995, to 12 percent in September 1998, and to 15 percent in September 2000, reduced to 12.5 in March 2006. They are not remunerated.

Table 18.Tonga: Exports by Major Commodity, 1999/00–2005/06 1/
1999/002000/012001/022002/032003/042004/052005/06
Prel.
Squash
Value (in millions of U.S. dollars)5.52.73.35.46.88.44.1
Volume (metric tonnes)15,30512,53514,02713,28221,28011,33013,100
Unit value (US$/tonne)357213235408322740316
Fish
Value (in millions of U.S. dollars)2.44.13.25.69.15.73.3
Volume (metric tonnes)7241,0571,3772,9453,2253,0541,952
Unit value (US$/tonne)3,3153,8792,3201,8812,8311,8651,673
Root crops
Value (in millions of U.S. dollars)0.61.00.80.80.71.30.6
Volume (metric tonnes)1,9702,3922,2722,0931,6532,9651,709
Unit value (US$/tonne)301419365361457426350
Vanilla
Value (in millions of U.S. dollars)0.50.20.32.32.60.60.0
Volume (metric tonnes)28152.715.319.911.02.2
Unit value (US$/kilogram)18111121481335228
Copra
Value (in millions of U.S. dollars)
Volume (metric tonnes)
Unit value (US$/tonne)
Kava
Value (millions of U.S. dollars)0.20.30.40.40.3
Volume (metric tonnes)25.734.954.035.222.2
Unit value (US$/kilo)8.88.97.711.212.5
Manufactured goods (in millions of U.S. dollars)0.70.30.50.30.51.50.6
Total (in millions of U.S. dollars) 2/13.46.58.415.018.914.09.2
Memorandum item:
Export unit value (1995/96 = 100)60.936.551.591.386.185.0101.2
Source: Tonga Statistics Department.

Values are on f.o.b. basis.

Includes reexports and total of only above products, thus may differ from total export figure of other tables

Source: Tonga Statistics Department.

Values are on f.o.b. basis.

Includes reexports and total of only above products, thus may differ from total export figure of other tables

Table 19.Tonga: Imports by Commodity, Category, and Sector, 1999/00–2005/06 1/(In millions of U.S. dollars)
1999/002000/012001/022002/032003/042004/052005/06
Prel.
Total imports70.769.887.385.697.4115.9115.6
By commodity group
Food, live animals, beverages, etc.23.522.524.424.029.431.932.5
Fuels, minerals and chemicals16.917.918.919.825.131.836.8
Crude materials, inedible6.65.26.46.67.88.29.4
Manufactured goods and materials9.27.910.29.18.210.09.6
Machinery, transportation and service equipment11.77.816.015.614.822.915.0
Miscellaneous2.88.511.410.512.211.112.3
By economic category
Consumer goods28.226.030.429.733.844.539.8
Intermediate goods29.920.227.627.227.431.929.7
Capital goods5.73.46.14.86.27.66.0
Others7.120.223.223.730.131.940.5
By institutional sector
Government6.98.510.27.29.37.88.7
Quasi-government2.52.73.92.01.62.72.5
Private61.458.673.376.386.6105.5104.7
Memorandum item:
Import unit value (1995/96 = 100)84.084.083.086.097.0109.9112.5
Source: Tonga Statistics Department.

Values are on c.i.f. basis derived from preliminary customs data.

Source: Tonga Statistics Department.

Values are on c.i.f. basis derived from preliminary customs data.

Table 20.Tonga: Direction of Trade, 1999/00–2005/06(In percent of total)
1999/002000/012001/022002/032003/042004/052004/052005/06
Prel.
Exports
Australia2.73.92.61.41.32.82.92.6
Fiji1.61.11.01.20.30.80.61.6
Japan58.143.640.838.639.747.247.053.4
New Zealand8.917.215.310.36.424.022.011.5
United States18.811.315.727.926.511.411.610.5
Other countries9.922.924.620.625.813.816.020.4
Total100.0100.0100.0100.0100.0100.0100.0100.0
Imports
Australia23.425.023.318.022.517.417.810.7
Fiji13.514.89.120.317.717.017.427.0
Japan5.97.94.83.22.83.03.03.6
New Zealand36.238.237.642.139.337.237.835.0
United States12.38.612.28.48.48.68.69.1
Other countries8.65.513.08.19.416.715.514.6
Total100.0100.0100.0100.0100.0100.0100.0100.0
Source: Tonga Statistics Department.
Source: Tonga Statistics Department.
Table 21.Tonga: Disbursements of Official External Loans and Grants, 1999/00–2005/06(In millions of U.S. dollars)
1999/002000/012001/022002/032003/042004/052005/06
Prel.
Total external loans disbursement 1/4.03.57.54.38.73.27.0
Of which:
Multilateral
Asian Development Bank2.01.05.50.06.80.00.0
International Development Association0.00.00.02.20.93.27.0
International Fund for Agricultural Developme0.00.00.00.00.00.00.0
Total grants1.70.91.9
Aid in kind1.20.00.1
Aid in cash0.50.91.91.32.65.19.9
Of which:
Bilateral grants0.40.70.80.51.12.55.7
Australia0.20.50.40.20.81.40.9
New Zealand0.10.00.20.20.31.14.6
Republic of China0.00.10.10.00.00.10.2
Multilateral grants0.10.21.10.81.52.64.2
EU0.00.10.70.30.81.23.2
UN agencies0.10.10.30.30.20.50.6
Others0.00.00.00.20.40.90.3
Total foreign assistance5.64.49.4
Source: Data provided by the Tongan authorities.

Includes government and government-guaranteed debt.

Source: Data provided by the Tongan authorities.

Includes government and government-guaranteed debt.

Table 22.Tonga: External Debt and Debt Service, 1999/00–2005/06(In millions of U.S. dollars)
1999/002000/012001/022002/032003/042004/052005/06
Prel.
Total external debt outstanding 1/56.551.961.466.675.476.480.6
Bilateral7.58.610.312.112.012.012.3
France0.00.00.00.00.00.00.0
Germany7.56.05.65.24.44.44.6
United Kingdom0.00.00.00.00.00.00.0
China0.02.64.66.97.57.67.7
Multilateral46.643.351.154.563.464.468.3
Asian Development Bank35.333.640.441.648.647.247.8
European Investment Bank1.00.30.70.30.90.60.6
International Development Association4.23.84.06.47.610.614.0
International Fund for Agricultural Development6.25.75.96.26.26.05.9
Commercial loans2.40.00.00.00.00.00.0
Debt service2.94.42.02.23.23.43.7
Amortization2.13.81.51.72.42.52.9
Interest0.80.60.50.50.80.90.8
Memorandum items:
External debt/GDP (in percent)35.736.743.141.841.535.535.8
GDP (in millions of U.S. dollars)158.1141.6142.6159.2181.8215.3225.3
Debt-service ratio (in percent of exports of goods and services)10.017.35.96.38.78.39.3
Average interest rate1.51.20.80.81.01.21.0
Amortization rate 2/3.77.22.52.53.23.33.6
TOP/USD (end of period)1.72.22.22.12.01.92.1
TOP/USD (period average)1.61.92.22.22.01.92.0
Source: Data provided by the Tongan authorities.

Includes government and government-guaranteed debt.

Percent of outstanding stock of debt at the beginning of the year that was amortized during the year.

Source: Data provided by the Tongan authorities.

Includes government and government-guaranteed debt.

Percent of outstanding stock of debt at the beginning of the year that was amortized during the year.

9

Prepared by Sutapa Amornvivat (Ext. 3-8774).

10

Refer to Table 7 in the Staff Report for the 2007 Article IV Consultation.

11

In this paper, credit to the household sector includes personal loans and mortgage loans from all financial institutions; plus farm and none-farm loans for small household enterprises which borrow from Tonga Development Bank.

12

Unlike in most emerging economies in Asia, there does not appear to be a housing bubble in Tonga due in parts to the lack of secondary markets for housing and rigid land tenure system.

13

Following the convention of corporate balance sheet analysis, two types of measures to gauge the strength of household balance sheets are solvency and liquidity ratios. Due to the lack of a national database on disposable income or assets, solvency is measured by the ratio of outstanding household debt to GDP.

14

Interestingly, mature market economies have the highest debt to GDP ratio on average, suggesting a higher degree of financial liberalization and higher income levels. This is not the case for Tonga.

15

Non-bank credit sources include credit unions, community cooperatives, micro-financial institutions, credit card companies, non-institutionalized moneylenders, relatives, and friends.

16

There is no clear evidence that a rise in banking efficiency contributed to higher household credit in Tonga. The entry of foreign banks started in the 1970s with Westpac and two other banks in the 1990s; there has been no change in the past five years that could explain the credit boom.

17

Tonga Development Bank has recently shifted towards more commercially-oriented operations.

18

As of end-2005.

Other Resources Citing This Publication