Tonga Reserve Bank to maintain monetary policy in face of mixed results for economy in June

Governor of the National Reserve Bank of Tonga Dr Sione Ngongo Kioa

NUKU’ALOFA, 22 AUGUST 2018 (KANIVA TONGA NEWS) – Despite slower economic activity in June, Tongan National Reserve Bank will maintain its current monetary policy.

The Governor of the Reserve Bank, Sione Ngongo Kioa, said the total export volume of agricultural products declined.

Consumption also fell and the Consumption Tax collected over the month declined in line with a fall in total business sales.

Electricity consumption declined, which indicated a slowdown in economic activities.

Elsewhere, economic indicators of the tertiary sector were mixed over the month with prominent results from the banking sector reflected in the banking system’s improving profitability.

Travel receipts increased, despite a fall in total air arrivals as the number of international dropped.

The total number of container registrations also declined over the month.

Imported prices increased due to higher prices of imported meat, fuel and tobacco.

The amount of reserve money in the banking system increased over June.

The level of foreign reserves rose to $468.7 million (US$205.2 million) in June 2018 due mainly to receipts of cyclone relief funds and other project funds.

The level of foreign reserves is expected to remain at comfortable levels and inflation is anticipated to fall below the Reserve Bank’s inflation reference rate of 5 per cent per annum at the end of 2018.

In light of the economic situation the Reserve Bank will maintain the monetary policy rate at zero per cent; keep the minimum loans/deposit ratio of 80 per cent; maintain the Statutory Reserve Deposit ratio at 10 per cent  and maintain the inflation reference rate at  five per cent.

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