Overseas Exchange Transactions

October 2018

Released on 25 February 2019 | Download the complete release | 143 KB

Foreign Reserves rise again on receipt of official transfers

Overall Balance & Foreign Reserve

The OET overall balance quickly bounced back from a deficit in the previous month to a surplus of $5.1 million in October 2018. The receipt of budgetary support and grant funds from development partners during the month recovered some of the losses on foreign reserves following the commencement of the government principal loan repayment to the EXIM Bank of China in September 2018. In November 2018 the Minister of Finance and EXIM Bank of China signed the deferring of Tonga’s loan repayment for another 5 years. Official foreign reserves rose to $457.3 million in October equivalent to 7.3 months of imports cover. Over the year, the foreign reserves, was $43.7 million higher than it was a year ago.

On the horizon, the Reserve Bank forecasts foreign reserves to remain at a comfortable level and above the 3 months of import cover in the near term. This is to be supported by expected higher receipts of remittances and foreign aid. Delays to the inflow of aid and budget support from development partners and Tonga’s vulnerability to natural disasters continues to pose a risk to the outlook.

Current Account

The current account balance improved in October and recorded a surplus compared to a deficit last month. This was due to improvements in all categories particularly the net transfer receipts. More than $10 million of budget support and government grants funds were received in October, boosting net transfer receipts to a monthly record of $33.8 million. Private transfer receipts also noted a slight increase of $0.6 million due mostly to higher receipts of remittances for family support and gifts. Net services receipts also rose to $5.2 million stemming mostly from higher personal travel receipts, whilst services payments declined, contributing to the monthly rise of the current account. The income balance also recorded a surplus in October following the deficit last month, and this was driven largely by lower payments outweighing the decline in receipts. In particular, this derived from lower payments of government loan interest compared to September. Minimal improvement was observed in the merchandise trade deficit due to a slight decrease in import payments.

In year ended terms, the current account balance deteriorated and recorded a deficit of $3.3 million. This resulted mainly from a widening deficit in the merchandise trade account as import payments continued to grow strongly over the year. This is further supported by the decline in services receipts as payments of services outweighed the rise services receipts. The negative trends in the performance of merchandise trade and services over the year, more than offset the positive growth of net income and transfers. Service receipts increased due to higher receipts from private services over the year (professional, management, consultancy, and other service fees). As for transfer receipts, private transfer receipts recorded an increase of $22.7 million which are mostly remittances.

Capital Account

The lower surplus is recorded for the capital account in October due mostly to a $1.4 million decline in receipts of government grants and project funds for investment projects. In year ended terms, the capital account continued to maintain its position of holding the highest surplus in the overall OET balance although a slight decline of$2.5 million is recorded. While receipts of official capital investment funds rose, the drop in the receipts of funds for construction and other capital expenditures by the private sector more than offset the rise in official capital receipts.

Financial Account

In October, the turnaround in the financial account balance stemmed from the lower government loan repayments following the commencement of the principal payment to the Export-Import (EXIM) Bank of China last month. Financial account payments declined more than the fall in financial account receipts leading to a surplus over the year, and this was due mainly to other investments particularly interbank receipts.

Overseas Exchange Transactions Releases

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Overseas Exchange Transactions Releases for 2018

	September Released on 25 February 2019 | 143 KB		October Released on 25 February 2019 | 143 KB
	July Released on 23 November 2018 | 150 KB		August Released on 27 December 2018 | 154 KB
	May Released on 15 August 2018 | 337 KB		June Released on 4 October 2018 | 148 KB
	March Released on 7 June 2018 | 174 KB		April Released on 15 August 2018 | 333 KB
	January Released on 16 May 2018 | 179 KB		February Released on 29 May 2018 | 174 KB

2017

	December Released on 19 March 2018 | 300 KB		November Released on 2 February 2018 | 285 KB
	October Released on 25 January 2018 | 272 KB		September Released on 27 December 2017 | 476 KB
	August Released on 27 November 2017 | 458 KB		July Released on 16 October 2017 | 264 KB
	June Released on 16 October 2017 | 259 KB		May Released on 15 August 2017 | 262 KB
	April Released on 10 July 2017 | 268 KB		March Released on 28 June 2017 | 270 KB
	February Released on 28 June 2017 | 367 KB		January Released on 21 June 2017 | 307 KB

2016

	December Released on 21 June 2017 | 314 KB		November Released on 21 June 2017 | 303 KB
	October Released on 3 April 2017| 479 KB		September Released on 28 March 2017| 493 KB
	August Released on 14 February 2017| 492 KB		July Released on 9 November 2016 | 467 KB
	June Released on 5 September 2016 | 630 KB		May Released on 10 August 2016 | 615 KB
	April Released on 30 June 2016 | 617 KB		March Released on 7 June 2016 | 613 KB
	February Released on 17 May 2016 | 634 KB		January Released on 10 May 2016 | 621 KB

2015

	December Released on 22 April 2016 | 670 KB		November Released on 22 April 2016 | 658 KB
	October Released on 29 January 2016 | 494 KB		September Released on 27 January 2016 | 518 KB
	August Released on 8 January 2016 | 288 KB		July Released on 22 December 2015 | 312 KB
	June Released on 9 December 2015 | 554 KB		May Released on 6 October 2015 | 630 KB
	April Released on 15 July 2015 | 653 KB		March Released on 3 June 2015 | 672 KB
	February Released on 10 April 2015 | 385 KB		January Released on 3 June 2015 | 741 KB

2014

	December Released on 16 February 2015 | 471 KB		November Released on 16 February 2015 | 441 KB