The proposed budget estimate for 2018/2019 is totaled at TOP$659.3 million.
The government budget support and donor cash is $476.8 million, while donor in-kind estimates at 182.5 million.
The Minister of Finance and National Planning Dr. Pohiva Tu’i’onetoa revealed this in his budget statement address. He said the 2018/2019 budget focus is on recovery from the impact of TC Gita.
The budget theme is “Recovery with greater resilience.” It aims to further boost urgent recovery and rebuild efforts to address disaster risk management and adaptation. This is to ensure a resilient growth and sustainable development in all sectors of the economy.
TC Gita caused a lot of damage to the agriculture, housing, offices, electricity, communication and businesses among other sectors. The total economic value of the destruction was estimated at $356 million equivalent to 30 percent of GDP in nominal terms.
Dr. Pohiva said Tonga enjoyed a vigorous economic growth of 3.4 percent for 2017/2018. However the cyclone slowed down its economic activities and therefore a revised growth of 1.1 percent drop for 2018/2019. This is a 2.3 percent decline from 3.4 percent in the current financial year.
The Finance Minister said economic activities are expected to pick up in the second half of 2018. It is supported by TC Gita related recovery and rebuild construction projects.
The construction sector remains the main driver of secondary sector growth in other sectors of the economy. The construction sub-sector was accounted to 9.5 percent in 2016/17, an increase from 9.0 percent in the previous year. This slight increase was due to commencement of earlier delayed construction activities and projects.
For 2017/18 a number of major projects that had earlier reached advanced construction stages were completed. These includes the upgrading of the domestic wharf Taufa’ahau Tupou IV’s wharf, and St George Government building.
Hon. Pohiva said about 30 percent of the GDP is from money remitted from overseas. The Tonga National Reserve Bank reported the level of remittances inflows increased by 10.9 percent to $284.2 million in 2016/17. And 12-months to February 2018 has reached $332.5 million with a monthly average of about $28 million.
A recovery package of $107 million over three years has been proposed by Government while awaiting further assistance.
Meanwhile Government has also geared most resources towards recovery on tight fiscal space to meet its fiscal objectives. The operating surplus are growing and debt is dropping with forecast for 2018/2019 external debt falling below 50 percent target.
For debt service Dr. Pohiva said it will increase for the next financial year by $14 million from $29 million in 2017/18.
Government also has in place range of policies to help drive businesses and privates towards recovery so that all Tongans contribute to return the country to stronger economic growth.