Overseas Exchange Transactions

June 2018

Released on 4 October 2018 | Download the complete release | 148 KB

Official grant receipts fuel high surplus in the overall balance

Overall Balance & Foreign Reserve

In June 2018, the balance of the overall OET recorded the highest surplus since January 2013 of $26.8 million. As a result, the official foreign reserves rose to a record high of $468.7 million, which is equivalent to 7.9 months of import cover.

In year ended terms, the overall balance recorded a $60.9 million surplus,  $7.9 million higher than the surplus in the year ended June 2017. Correspondingly the official foreign reserves rose from $407.9 million in June 2017 (7.5 months of import).

The Reserve Bank anticipates the level of foreign reserves will remain at comfortable levels above the 3 months of import cover in the near term supported by higher receipts of remittances and foreign aid. However, any delays to the inflow of aid and budget support from development partners, the commencement of loan principal repayment to the Export - Import (EXIM) Bank of China, combined with the pace of development in the domestic economic activities, may pose a risk to the foreign reserves outlook. Uncertainties in the world fuel and commodities prices and Tonga’s vulnerability to natural disasters are also a risk.

Current Account

The current account balance for this month marked its highest surplus since January 2017.  This was attributed mainly to the receipt of grants from development partners consisting of cyclone relief funds, grants for technical assistance and for other current expenditure of the government ministries and boards.  This was also supported by large funds received by schools and churches, although it was slightly lower this month. Higher export proceeds also supported the trend.

Majority of payments made during the month was for import purposes, although it was slightly lower by 0.6% to $37.4 million.  These payments were mainly for the import of wholesale and retail goods which rose by 35%.  On the other hand, the export proceeds rose by $0.5 million and were mainly from marine and other products like paints. Both payments and receipts of services particularly for passenger fare payments and receipts of insurance claims were lower over the month which explained the lower deficit balance in the services account. However, dividend payments to nonresident shareholders rose by $3.3 million and receipts from Regional Seasonal Workers and other residents who worked overseas declined over the month by 9.7% causing a deficit balance in the income account.

Over the year to June 2018, the surplus in the current account was lowered by $13.1 million to $19.1 million.  The higher merchandise trade deficit and the deficit in the income account more than outweighed the higher surplus from transfer services.  Higher payments for imported oil and wholesale & retail goods drove the higher merchandise trade deficit which coincided with a rise in container registrations by 857 containers indicating growth in the trade sector.  Export proceeds from all sectors however, declined over the year.  The net income payments were mainly dividend sent abroad to non-resident shareholders.

Both private and official transfer receipts rose over the year with private transfer receipts rising over the year by 8.9% reflecting the continuous increase in remittances indicating the willingness of Tongan families abroad to support the local families in events that had happened during the year. The telecommunication receipts drove the increase in service receipts, supporting growth in the telecommunication sector while service payments were mainly for professional, management consulting and other business services.

The surplus in the capital account slightly rose by $0.9 million over the month of June 2018 stemmed from a $1.1 million rise in the surplus of the official capital account. The fund receipts by Government for investment projects or capital expenditures, for construction purposes increased over the month while the fund receipts by private companies decreased.  Both official and private capital payments recorded NIL payments over the month.

Over the year to June 2018, the capital account maintained its position of holding the highest surplus in the current account, as it rose by $10.8 million to $40.6 million.  The fund receipts by both Government and private companies for investment projects or capital expenditures, for construction purposes increased over the year by $7.4 million and $4.6 million respectively.  This outweighed the rise in official capital payments and supported by lower private capital payments.  The construction projects include the Tonga Transport Sector Consolidation road maintenance projects, renovation works at the airport and individuals and private companies’ renovation works after Tropical Cyclone Gita.

Capital Account

In May 2018, the capital account recorded a surplus of $2.6 million, which was slightly lower than the surplus recorded in the previous month. Both surpluses in the official and the private capital accounts decreased over the month by $0.1 million each. The rising payments for investment projects or capital expenditures, for construction purposes by Government plus the lower receipts for investment projects or capital expenditures, by individuals & private companies contributed to the lower surplus.

Annually, the capital account recorded a higher surplus of $41.7 million in May, which contributed mainly to the rise in the official capital receipts mainly for construction purposes. This was supported also by a significant increase in private capital receipts for construction purposes. These construction projects included the Tonga Transport Sector Consolidation road maintenance projects, the renovation works at the airport and individuals and private companies’ renovation works after Tropical Cyclone Gita. Payments slightly increased over the year but have very minimal impact on the balances over the year.

Financial Account

The deficit in the financial account over the month of June 2018, widened by $2.4 million due to higher interbank payments.  In year ended terms, the financial account recorded a surplus after recording a deficit in June 2017, which was attributed mainly to higher interbank receipts.

Overseas Exchange Transactions Releases

• Overseas Exchange Transactions Releases for 2018
• 2017
• 2016
• 2015
• 2014

Overseas Exchange Transactions Releases for 2018

	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