Overseas Exchange Transactions for June 2019

Foreign Reserves hit new high on Budget support receipts


Overseas Exchange Transactions
Net Change to Foreign Reserves (TOP$ millions)

  Month Ended Year Ended
  Jun 19
May 19
Apr 19
Mar 19
Jun 19
Jun 18


Overall balance
16.0 4.1 -0.8 -8.5 15.6 60.9
Net Current Account
19.8 5.1 -0.8 -11.3 -2.7 21.0
Net Capital Account
9.1 4.7 2.7 2.2 42.1 40.6
Net Financial Account -12.9 -5.7 -2.7 0.6 -23.8 -0.7
Foreign Reserves Levels 484.3 468.3 464.2 465.0 484.3 468.7

Sources: Banking system | National Reserve Bank of Tonga

Overall Balance & Foreign Reserve

The official foreign reserves rose by $16.0 million in June 2019 to $484.3 million, equivalent to 7.9 months of import cover. As expected, higher official receipts for budgetary support and government funded projects contributed to the higher level of foreign reserves. Additionally, the official foreign reserves increased over the year by $15.6 million as a result of higher receipts for budget support, grants, and cyclone relief funds from development partners.

The overall Overseas Exchange Transactions (OET) balance edged higher in June 2019 as total receipts rose by $24.6 million and outweighed a $10.6 million rise in total payments. Total OET receipts peaked at $100.9 million in June 2019, of which 33% were for official current transfers, and 24% were for private transfers, including remittance. The high level of official transfers reflects the inflow of budget support and committed grant funds for the closing of the fiscal year. Other receipts also rose for interbank transactions and construction and telecommunication services. Higher payments over the month were for investment and dividends sent abroad. Despite the favourable monthly movement, the surplus in the overall balance decreased to $15.6 million (-45.3%) over the year and was due mainly to higher imports & services payments, offshore investments, and interbank transfers. These outflows outpaced the rise in receipts from travel, income, and official receipts.

On the outlook, the Reserve Bank continues to expect the level of foreign reserves will remain at comfortable levels and above 3 months of imports cover in the upcoming months. However, external debt repayments, implementation of infrastructure projects, and expected transfer of offshore investments pose a risk to the foreign reserves outlook. Global uncertainties in oil and commodity prices are also risks to these expectations.

Current Account

The significant official transfer receipts drove the current account surplus higher to $19.8 million in June 2019, an $11.9 million rise. The services account surplus and merchandise trade deficit also improved. However, the income account recorded a deficit due to higher payments, income receipts declined over the month. The transfer account rose by $17.6 million primarily due to the substantial increase in official transfer receipts, which were mainly for budget support and other government-funded projects. Official transfer receipts increased by $26.7 million and outweighed the decline in private transfer receipts.

Moreover, the goods and services account balances improved over the month, mainly due to lower payments in June 2019. The services account surplus increased by $3.7 million over the month as payments for services declined from a high level of payments for transport-related services in May 2019. Receipts for services other than travel increased by $1.0 million for construction and telecommunication purposes. The merchandise trade deficit narrowed marginally over the month due to lower import payments by $1.2 million for wholesale & retail goods, followed by payments for oil and motor vehicle imports. Export receipts also declined by $0.3 million due to the fall in proceeds from all export types.

However, the income account recorded a $4.8 million deficit in June 2019 compared to a $2.5 million surplus in May 2019. Income payments rose by $6.8 million solely due to dividend paid to foreign investors during the month. Income receipts, on the other hand, declined by $0.6 million due mainly to lower receipts from the Recognized Seasonal Employee and Seasonal Workers Programme schemes, which decreased by $0.9 million over the month.

In year ended terms, the current account balance surplus fell from a$21.0 million surplus to a $2.7 million deficit owing to the trade deficit and lower private transfer receipts. The merchandise trade deficit widened, attributing to the continued growth in import payments by $37.2 million, due to higher payments for all categories of imports such as wholesale & retail, government imports, motor vehicles, oil, and construction materials. Lower private transfer receipts were mainly due to lower receipts for family support. Nonetheless, the income account improved on the decline in income payments by $14.6 million as payments for dividends and profits to overseas investors fell by $12.4 million (59.4%). The slight decrease in the services account was mainly due to slightly higher service payments for travel-related expenses (airfares & travel allowances), freight, maintenance & repair, professional services, and insurance premium pay-outs outweighing the increase in service receipts.

Capital Account

The capital account surplus rose over the month by $4.4 million, mainly driven by government-funded project receipts, which increased by $4.2 million, while private capital receipts rose by $0.2 million. These receipts were mostly for investment projects and capital expenditures by the government and receipts by private households for construction purposes. There were no capital transfer payments recorded in June 2019.

Additionally, the capital account surplus increased over the year by $1.5 million, solely attributed to official capital receipts, which increased by $5.6 million. This reflects on-going project works funded by multi-national donors such as Tonga International Airport expansion and the Tonga Power network upgrades.

Financial Account

The financial account deficit widened over the month as a result of higher interbank payments by commercial banks to settle foreign exchange deals for their underlying customers, and offshore investment transfers. Consequently, the financial account recorded a $23.8 million deficit over the year compared to a lower deficit in the previous year. The principal repayment of the Government loan to EXIM Bank of China and higher inter-bank payments contributed to the yearly deficit.


Overseas Exchange Transactions Releases

Overseas Exchange Transactions Releases for 2019


pdfIcon May
Released on 1 October 2019 | 243 KB
pdfIcon June
Released on 17 October 2019 | 274 KB 

pdfIcon March
Released on 3 July 2019 | 155 KB
pdfIcon April
Released on 29 July 2019 | 247 KB

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

2018


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

pdfIcon September
Released on 25 February 2019 | 143 KB
pdfIcon October
Released on 25 February 2019 | 143 KB

pdfIcon July
Released on 23 November 2018 | 150 KB
pdfIcon August
Released on 27 December 2018 | 154 KB  

pdfIcon May
Released on 15 August 2018 | 337 KB
pdfIcon June
Released on 4 October 2018 | 148 KB 

pdfIcon March
Released on 7 June 2018 | 174 KB
pdfIcon April
Released on 15 August 2018 | 333 KB

pdfIcon January
Released on 16 May 2018 | 179 KB
pdfIcon February
Released on 29 May 2018 | 174 KB 

2017


pdfIcon December
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pdfIcon November
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pdfIcon July
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pdfIcon June
Released on 16 October 2017 | 259 KB
pdfIcon May
Released on 15 August 2017 | 262 KB

pdfIcon April
Released on 10 July 2017 | 268 KB
pdfIcon March
Released on 28 June 2017 | 270 KB

pdfIcon February
Released on 28 June 2017 | 367 KB
pdfIcon January
Released on 21 June 2017 | 307 KB

2016


pdfIcon December
Released on 21 June 2017 | 314 KB
pdfIcon November
Released on 21 June 2017 | 303 KB

pdfIcon October
Released on 3 April 2017| 479 KB
pdfIcon September
Released on 28 March 2017| 493 KB

pdfIcon August
Released on 14 February 2017| 492 KB
pdfIcon July
Released on 9 November 2016 | 467 KB

pdfIcon June
Released on 5 September 2016 | 630 KB
pdfIcon May
Released on 10 August 2016 | 615 KB

pdfIcon April
Released on 30 June 2016 | 617 KB
pdfIcon March
Released on 7 June 2016 | 613 KB

pdfIcon February
Released on 17 May 2016 | 634 KB
pdfIcon January
Released on 10 May 2016 | 621 KB

2015


pdfIcon December
Released on 22 April 2016 | 670 KB
pdfIcon November
Released on 22 April 2016 | 658 KB

pdfIcon October
Released on 29 January 2016 | 494 KB
pdfIcon September
Released on 27 January 2016 | 518 KB

pdfIcon August
Released on 8 January 2016 | 288 KB
pdfIcon July
Released on 22 December 2015 | 312 KB

pdfIcon June
Released on 9 December 2015 | 554 KB
pdfIcon May
Released on 6 October 2015 | 630 KB

pdfIcon April
Released on 15 July 2015 | 653 KB
pdfIcon March
Released on 3 June 2015 | 672 KB

pdfIcon February
Released on 10 April 2015 | 385 KB
pdfIcon January
Released on 3 June 2015 | 741 KB

2014


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

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