Remittances has been above 25 million for five consecutive months

Remittances  September 2017


* TOP $m
Sep 17
Aug 17
Jul 17
Jun 17

Remittance Receipts
25.99 28.42 25.46 26.54
Private Transfers
23.02 25.67 23.78 24.46
Employee Compensation
2.26 2.03 1.25 1.42
Private Capital Transfer 0.67 0.65 0.40 0.50
Social Benefits 0.04 0.06 0.04 0.16

* Month-ended

Remittance receipts decline to around $26 million in September 2017, 8.5% lower than the previous month. Total private transfers (particularly family support) drove the overall decrease, followed by a decline in receipts from social benefits. However, receipts from compensation of employees and social benefits receipts rose over the month. The women’s annual roll call and the Tongan churches annual offerings during the month contributed to maintain the high level of remittance receipts. In year ended terms, total remittance rose by around 12% to $294.2 million, with private transfer largely attributed to the overall growth.

The Australian Dollar (AUD) continued to be the dominant currency in remittance receipts (accounting for 39% of the total remittances) in September 2017. United States Dollar (USD) and New Zealand Dollar (NZD) receipts followed with 33% and 22% respectively. The receipts in these major currencies all declined during the month with USD decreasing the most by $1.6 million, whereas AUD and NZD followed with a decline of $0.6 million and $0.2 million respectively.

Foreign Exchange Dealers (FEDs) continued to be the preferred channel for receiving of remittances. In September 2017, around 86% of the total remittance receipts were received via FEDs compared to 83% in the previous month and 90% in September 2016.

Private Transfers

In September 2017, private transfers fell by 10.3% to $23.0 million, particularly lower receipts of family support from friends and relatives abroad. Private transfers accounted for 89% of the total remittance receipts and 39% of the total OET receipts. Family support receipts via FEDs in the major currencies fell over the month with the USD receipts decreasing the most by $1.0 million in addition to AUD and NZD receipts which fell by $0.5 million and $0.2 million respectively.

In year ended terms, private transfers rose by around 14% to $273.1 million, largely owing to higher receipts for family support.

Employee Compensation1

Employee compensation rose by $0.2 million (11.4%) over the month and represented 9% of the total remittance receipts. Receipts from the Recognised Seasonal Employer (RSE) Scheme workers rose by $0.17 million in addition to other wages & salaries which rose by $0.06 million.

Over the year to September 2017, total compensation of employees declined by around 21% to $15.3 million, due mainly to lower receipts from RSE workers.

Private capital transfer & Social Benefits

In September, private transfers for capital expenditures slightly rose by 3% to $0.7 million whereas social benefits fell by $0.02 million to $0.04 million. Both categories of remittance only accounted for 3% of the total remittance receipts.

In year ended terms, private capital transfers rose by $2.6 million due mainly to higher receipts by households for construction related activities. Social benefits, on the other hand, fell by $1.1 million over the period.

Outlook

Remittance receipts are anticipated to remain high in the upcoming months as Christmas festivities and holiday season approaches. The Reserve Bank will continue to closely monitor the remittance receipts given it is the largest source of foreign exchange inflow for the economy.


1 - Employee compensation is the sum of wages and salaries from the Recognised Seasonal Employer (RSE) program, Tongan residents working short term overseas, and resident employees serving foreign organizations.


Enquiries

Economics Department
National Reserve Bank of Tonga
NUKU'ALOFA

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

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Resources

Remittances - September 2017
Released on 27 November 2017 | pdfIcon 457 KB - Download a copy of the full report.

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