National Reserve Bank of Tonga

Issuance of the Revised Exchange Control Directive, Effective 1st June 2023

The Reserve Bank Board approved in February 2023 the revision of the September 2018 Exchange Control Directive and Exchange Control Guideline, to ease overseas payments in accordance with the Foreign Exchange Control Act 2018. The Directive and Policy Guidelines outlines different types of overseas payments, the supporting documentary evidence that must be sighted by the commercial banks, foreign exchange dealers and the Reserve Bank prior to allowing any overseas payments to be made, and the delegated limits for banks and foreign exchange dealers to conduct outward payments. The revised Directive will come into force on the 1st June 2023.

A summary of the revisions are as follows:

1. Two new Exchange Control Forms
   1. Form G for Transfer/issue of securities (excluding shares)
   2. Form H for Opening of a Foreign Currency Account
2. Foreign currency account
   1. Discontinue the requirement for any deposit and/or withdrawal to/from the foreign currency accounts from/to a local Tongan Pa’anga account or another local foreign currency account to be converted to its Tongan Pa’anga equivalent first before they are converted back to the relevant foreign currency. This is to ease transfers and save customers from additional foreign currency exchange rate losses and banks’ transaction fees.
   2. Clarify that all outward payments from the Foreign Currency Accounts do not require approval from the Reserve Bank.
3. Reward System
   1. Introduce a reward system for customers who continuously complied with the Exchange Control documentary requirements. This would be in the form of an “Exemption List” issued to banks and foreign exchange dealers.
4. Limit on Exchange rate spreads
   1. All authorised persons would be subject to a limit on the exchange rate spreads offered to their customers in accordance with Section 6(2)(c) of the Foreign Exchange Control Act 2018. The limits will only apply to Telegraphic Transfers (TT) of the three main currencies (USD, AUD and NZD). These limits were imposed on the banks since 2009 but to ensure a level playing field, these limits would now apply to foreign exchange dealers. This limit is part of the Reserve Bank’s efforts to cushion the impact of rising global prices and high inflation on the purchasing power of households and businesses.

The Reserve Bank continue to provide an enabling environment for the public (households and businesses) to conduct their foreign exchange transactions whilst at the same time ensure prudent management of our foreign reserves to support the macroeconomic stability of the country. Any non-compliance with the Exchange Control Directives will be dealt with in accordance with the Foreign Exchange Control Act 2018 Section 11(3) and Section 29.

The public’s support and cooperation is requested to ensure adherence with the requirements of the Foreign Exchange Control Act 2018.

Enquiries

National Reserve Bank of Tonga
Fasi mo e Afi
NUKU'ALOFA

Telephone: (676) 24057
Fax: (676) 24201
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Resources

Press Release in English 149 KB - Download a copy of the full press release.

Press Release in Tongan  285 KB - Download a copy of the full press release.