28 February 2023

Nuku’alofa – This year’s Development Partners Forum is very timely and most appropriate on mapping a way forward to ensure a prosperous Tonga, the Honourable Prime Minister stated at the Faonelua Convention Centre in Nuku’alofa this morning.

Speaking at the opening session, Hon Hu’akavameiliku said a strong commitment by development partners and donors is still needed to increase access to financial assistance; to restructure and reduce debt burdens; and scale up development financing in Tonga.

He said this was critical following the Hunga Tonga – Hunga Ha’apai volcanic eruption and tsunami last year and the effect the COVID-19 lockdown had on the local economy.

“On that note, I express my most sincere gratitude for the highest level of support and assistance that you all bestowed in responding to our very urgent needs during this time of hardship. Although your commitment and assistance are ongoing, we must thank you as the Government alone could not have done it. Mālō ‘Aupito!,” Hon Hu’akavameiliku told development partners present.

He stated that although good progress have been made, the necessary work for recovery, strengthening the country’s resilience, and debt servicing will result in the financial and economical situation we are in.

“Therefore we still need continued partnership to building sustainable future prosperity for Tonga. The working together of key stakeholders – parliament, government, private sector, civil society organizations, financial institutions, media, and the public – will sustain Tonga’s prosperity and hope. A hope that in a few years, we will have a more resilient Tonga, socially, economically and environmentally, more accessible and affordable services, and we have better control of our debt, and a progressive economic growth,” he added.

“But one step at a time, and its not going to be easy but we will achieve a resilient, inclusive, and sustainable development for Tonga together.”

He urged all present to take action in the framework of Tonga’s national development policies in the Tonga Strategic Development Framework II and the approved nine Government Priority Areas (GPAs) with the revised National Infrastructure Investment Plan (NIIP2).

“Concerted efforts to addressing climate change is always critical, sectoral reforms need to be undertaken where necessary, and implement a robust investment plan for development and government priorities,” he stated.

Economy

The Hon Prime Minister said Tonga’s economic growth is projected to further decelerate from minus 2.7 percent in 2021 to minus 3.1 percent in 2022, marking the second lowest growth rate in recent decades, following the Hunga Tonga – Hunga Ha’apai (HTHH) volcanic eruption and resulting tsunami, the COVID-19 pandemic, energy crises with surging inflation, and debt tightening.

“However, Tonga’s growth is forecasted to moderately pick up to 2.4 percent in 2023 and 2.6 percent in 2024, largely due to the reconstruction and recovery efforts from the devastating shocks I have just alluded to. In other words, it is highly dependent on the pace and sequence of these reconstruction, investment in key sectors, effective fiscal and monetary policies, and other budgetary structural measures being implemented,” he said.

Tonga’s economic prospects is compounded by the gloomy global economic outlook also threaten the achievement of Tonga’s Sustainable Development Goals (SDGs) targets, which in September this year marks the mid-point of the implementation of the 2030 Agenda.

Government’s additional financing needs in medium term are estimated at T$84.5 million in 2023-24, T$88.3m in 2024-25, and T$79.5m in 2025-26.

“The government is trying to avoid fiscal austerity which would stifle growth and disproportionately affect the most vulnerable groups, affect progress in gender equality, and stymie development prospects across generations,” Hon Hu’akavameiliku said.

“Stronger fiscal measures are needed to resuscitate Tonga’s economy and support her development agenda. Thus, fiscal policy measures put in place will reallocate and reprioritize government expenditures through direct policy interventions that will target to create jobs and reinvigorate growth.

“It will also require managing the wage bill, including organizational reviews of Ministries, Departments and Agencies (MDAs), and debt servicing. There will be more targeted subsidies, which can be complemented with a comprehensive review of fees and charges, so we can have accessible and affordable services.”

The Development Partner’s Forum 2023 was held under the theme ‘Partnership for Resilient, Inclusive and Sustainable Development for Tonga’.