Overseas Exchange Transactions for February 2019

Lower capital account surplus following a hike in January

Overall Balance & Foreign Reserve

Fewer receipts in the capital account in February 2019 compared to the previous month coupled with higher deficit in the current account widened, drove the overall balance to record a $5.5 million deficit following the surplus recorded last month.

Consequently, the official foreign reserves fell to $473.5 million over the month equivalent to 8.0 months of import cover. Annually, the surplus in the overall balance lowered by $25.5 million and was attributed mainly to higher imports and services payments. As such, the official foreign reserves increased over the year by $25.5 million. The annual growth resulted from higher receipts of budget support, grants and cyclone relief funds from development partners.

The Reserve Bank anticipates the level of foreign reserves to remain at comfortable levels and above the 3 months minimum range of import cover for the remainder of 2019. However, any delays to the inflow of aid and budget support from development partners, combined with the pace of development in the domestic economic activities, may pose a risk to the foreign reserves outlook. Uncertainties in the global oil and commodities prices and Tonga’s vulnerability to natural disasters are also risks to the forecast.

Current Account

Receipts in the current account declined coupled with an increase in payments, led to a widening of the current account deficit over the month. These were mainly higher payments for imported goods which outweighed the rise in the transfers account. The merchandise trade deficit widened due to higher payments by $1.7 million for wholesale & retail goods and government imports. On the other hand, export receipts declined by $0.3 million over the month due to lower receipts from the agricultural sector. Although both payments and receipts to the services accounts declined in February, the higher payments compared to receipts led to a deficit in the account compared to a surplus in the previous month. Movements in the income account were similar to that of January with both payments and receipts remaining at the same amount and the net surplus remained at $1.5 million. The surplus on the transfers account increased by $2.5 million over the month due to higher receipts coupled with lower payments. More specifically, official receipts rose by $1.6 million mainly for the purposes of government budget support and funded projects from development partners. Receipts for donations and projects to non-profit organizations also increased by $1.0 million. However, lower private transfers resulted from lower remittances for family support over the month.

In year ended terms, the current account balance recorded a $9.6 million deficit compared to a surplus in the previous year. More specifically, the merchandise trade deficit and higher services payments have outweighed the rise in income and transfers receipts. Import payments increased by $38.0 million due to higher payments for wholesale & retail, oil, government imports and motor vehicles. Higher service payments were noted for freight, travel related, professional services and maintenance & repair. Net income rose to a $7.7 million surplus compared to a deficit recorded in the previous year. This was attributed to higher income receipts over the year whilst income payments declined. Additionally, receipts for compensation of employees also increased by $5.2 million which includes wages paid under the Recognized Seasonal Employee and other jobs. The transfers account was higher by $17.0 million due to higher transfer receipts which was greater than the rise in transfer payments. Private transfer receipts rose by $9.2 million due to higher remittances for family support from abroad. Official transfer receipts increased by $8.7 million particularly for government projects, aid, and budget support funds. Receipts by non-profit organizations also contributed to the yearly surplus and rose by $5.3 million.

Capital Account

The surplus in the capital account fell by $7.5 million over the month following the significant rise in capital account receipts in January 2019 which was for construction project in the agricultural sector. This was driven solely by the $7.9 million decline in the surplus of the private capital account offsetting the $0.4 million increase in the surplus from the official capital account. These receipts are mainly for investment projects and capital expenditures. Both official capital and private capital transfer accounts recorded no payments during the month.

Additionally, the capital account surplus also lowered over the year by $10.5 million due to lower receipts from both private and official capital receipts. Private receipts and grants for investment projects and capital expenditures declined by $10.8 million driving the yearly fall. The official capital transfer receipts also recorded a $2.0 million fall. Despite on-going project works funded by multi-national donors, the decline over the year could reflect a delay in the implementation of the projects and other budget support receipts.

Financial Account

The surplus in the financial account increased over the month as a result of higher transfers by foreign commercial banks to their accounts in Tonga for payments to customers. Over the year, the financial account surplus rose by $1.6 million due to higher inter-bank payments which was sufficiently covered by interbank receipts. This was also supported by the lower deficit in the direct investment accounts as fewer payments for dividends and capital were recorded over the year.

Overseas Exchange Transactions Releases

• Overseas Exchange Transactions Releases for 2019
• 2018
• 2017
• 2016
• 2015
• 2014

Overseas Exchange Transactions Releases for 2019

	January Released on 18 June 2019 | 152 KB		February Released on 21 June 2019 | 158 KB

2018

	November Released on 5 April 2019 | 144 KB		December Released on 1 May 2019 | 143 KB
	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