National Reserve Bank of Tonga

Return of funds to head office and lower remittances contributed to overall balance deficit

Total OET Receipts

The total OET receipts for September 2017 declined by $10.4 million (15.1%) to $58.8 million. Lower transfer receipts’ mainly private transfers and lower services receipts drove this monthly decline. Financial account receipts also decreased while capital account receipts rose over the month. Over the year, the total OET receipts continued to increase by $77.1 million (11.3%) to $758.0 million, attributed mainly to higher inflows of private remittance and travel receipts supported by the celebrations and annual events during the year.

The US dollar (USD) continued to be the dominant currency in OET receipts with a share of 46% of the total OET receipts, slightly decreasing from 48% in the previous month. Australian dollar (AUD) and Tongan Pa’anga (TOP) receipts followed with a share of 21% and 14% respectively compared to 18% and 14% in August 2017. This coincided with both the strengthening of the US dollar (USD) and Australian dollar (AUD) against the Tongan Pa’anga (TOP).

Current Account Receipts

In September 2017, the receipts of the current account declined by $9.4 million (16.4%) to $48.0 million. The lower receipts in the private and official transfers mainly contributed to this. Additionally, both services and export receipts also decreased while primary income receipts slightly rose. In year ended terms, the total current account receipts continued to rise by $88.1 million (16.3%) to $627.9 million. Higher private transfer and travel receipts again drove this annual increase. Current account represented 82% of the total OET receipts in September 2017.

Transfer receipts fell over the month of September 2017 by $5.5 million (16.2%) to $28.7 million. Private transfer receipts declined the most by $2.7 million over the month mainly private remittances. Official transfer receipts followed with a decline of $2.3 million driven by the receipts of Government budgetary support last month. Non-profit transfer receipts which includes funds for local churches, schools and clubs slightly declined by $0.6 million. Transfer receipts accounted for 49% of the total OET receipts. In year ended terms, total transfer receipts rose by $57.2 million (16.4%) to $406.5 million, driven by higher private transfers, particularly receipts for family support.

Services receipts declined over the month by $2.6 million (13.8%) to $16.0 million. This was driven by lower receipts from other services mainly receipts from telecommunication services as receipts declined by $2.2 million over the month. Receipts from personal travel declined also by $1.0 million in the same period. Over the year, service receipts rose by $31.2 million (20.8%) to $180.8 million, of which 63.4% of total annual service receipts were from travel receipts and the remaining 36.6% were from the other services. This coincided with the rise in international arrivals by 14% over the year.

The export proceeds for September 2017 decreased also by $1.5 million, due mainly to lower receipts from other exports by $0.8 million. Agricultural export proceeds fell also by $0.6 million and receipts from marine exports fell by $0.1 million. Total receipts from export however rose over the year by $6.1 million of which $3.7 million were agricultural exports proceeds.

On the other hand, primary income receipts slightly rose by $0.2 million over the month due to higher receipts of wages by residents who worked overseas. In contrast, primary income receipts still declined by $6.3 million over the year mainly due to lower receipts of wages of residents working overseas.

Financial Account & Capital Account Receipts

Financial account receipts for the month of September 2017 fell by $1.7 million to $5.9 million, mainly due to lower interbank transfers. Direct investment slightly rose by $0.2 million while portfolio investment continued to record no receipts in September 2017. Capital account receipts however rose over the month by $0.7 million. Private capital transfer receipts rose by $0.9 million partly offset by the $0.1 million decline in official capital transfer receipts. Over the year to September 2017, financial account receipts declined by $24.6 million to $93.1 million whereas the receipts on the capital account rose by $13.6 million to $37.0 million.

Total OET Payments

The total OET payments for September 2017 however rose by $4.1 million (6.4%) to $67.4 million, mainly due to higher financial account payments. In annual terms, total OET payments rose by $68.2 million (11.5%) to $663.3 million, attributed to higher import and primary income payments, particularly for wholesale & retail goods and dividend payments.

The USD remained the top currency for OET payments in September 2017, rising from a share of 46% last month to 50%. The NZD and FJD payments followed with a share of 23% and 15% respectively of the total OET payments over the month.

Current Account Payments

Current account payments fell over the month by $4.9 million (7.9%) to $57.5 million. All major categories of current account payments declined with the exception of primary income payments. Lower imports, transfers and services payments during the month drove the overall decline in current account payments. In annual terms, the total current account payments rose by $60.6 million (11.0%), attributed mainly to higher imports and primary income payments. Current account payments accounted for 92.4% of the total OET payments.

Total import payments for September 2017 declined by $6.3 million to $33.8 million. This was attributed mainly to a decrease in government and oil import payments by $4.8 million and $2.4 million respectively. Constructions import payments also fell slightly by $0.1 million while payments for wholesale & retail and vehicle imports rose over the month by $1.0 million and $0.2 million respectively. Over the year, total import payments rose by $38.4 million to $378.5 million, driven mainly by higher wholesale & retail import payments which rose by $88.5 million. This coincided with the rise in container registrations over the year by 14.2%.

Transfer payments declined in September 2017 by $1.4 million (28.5%) to $3.5 million. Private and non-profit transfer payments fell by $1.1 million and $0.3 million respectively while official payment continued to record no payment during the month. In year ended terms, total transfer payments declined by $9.2 million, due mainly to lower private transfer payments particularly gifts sent to families and relatives abroad.

Service payments slightly declined over the month by $0.9 million to $13.5 million due to a fall in payments for other private services, particularly telecommunication services. In year ended terms, service payments rose by 8.6% to $141.5 million attributed mainly to higher payments of personal travel and transport services.

On the other hand, primary income payments also rose by $3.7 million over the month and by $20.2 million over the year, due mainly to repatriation of dividends abroad.

Capital & Financial Account Payments

Financial account payments rose by $8.8 million over the month and by $7.0 million over the year, mainly due to higher outflow of direct investments driven by returning of funds to head office. Capital account payments slightly rose over the month by $0.1 million and $0.6 million over the year, due mainly to higher private grants for capital expenditures.

Overall Balance & Foreign Reserves

The balance of Overseas Exchange Transactions recorded a deficit of $2.0 million for the month of September 2017 lower than what was recorded in August 2017. This contributed to the fall in the official foreign reserves to $403.0 million in September 2017, sufficient to cover 6.8¹ months of imports, which remained above the Reserve Bank’s minimum range of 3-4 months of imports.

The foreign reserves is anticipated to remain comfortably above the minimum range, given the expectation of on-going remittance receipts, Government receipts from donor partners for technical assistance & other current expenditures and for investment projects or capital expenditures which partly offset the higher anticipated import payments.

1 - Method of calculation changed in February 2017 to include imports of both goods and services (previous method used imports of goods only)

Enquiries

Economics Department
National Reserve Bank of Tonga
NUKU'ALOFA

Telephone: (676) 24057
Fax: (676) 24201 
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Resources

Overseas Exchange Transactions - September 2017 Released on 27 December 2017 | 476 KB - Download a copy of the full report.

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