Tonga: 2009 Article IV Consultation: Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Tonga
IMF Staff Country Reports, September 22, 2009
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- Canonical URL
- Tonga: 2009 Article IV Consultation: Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Tonga
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Bibliographic details
- Published: September 22, 2009
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451837513.002
Summary findings
- Tonga’s growth is likely to be low in the near term as remittances remain constrained by global economic conditions.
- Reconstruction of the central business district and increased subsistence agriculture are likely to cushion downward pressures on the economy.
- Risks are tilted to the downside, mainly owing to increasing unemployment in remittance-sending economies and rising oil prices.
- The drawdown of the large reconstruction loan will lead to high risk debt levels over the medium term.
Economic outlook and channels
- Remittances: constrained by global economic conditions, contributing to low near-term growth.
- Reconstruction spending: rebuilding the central business district expected to support activity.
- Agriculture: increased subsistence agriculture expected to cushion negative impacts.
- External shocks: rising oil prices represent a downside pressure.
Risks and vulnerabilities
- Primary downside risks:
- Increasing unemployment in remittance-sending economies.
- Rising oil prices.
- Fiscal/external vulnerability:
- Drawdown of the large reconstruction loan will raise public debt to high risk levels over the medium term.