Tonga

Politics:

• Analysis

  Tonga politics: Quick View - No-confidence vote saga drags on

  Event

  In early August Tonga's parliament was adjourned for three weeks, further delaying the no-confidence vote against the government that was first proposed by the opposition in June.

  Analysis

  The adjournment, until August 20th, was reportedly decided in order to allow several ministers to make overseas trips. The proposed vote of no confidence has already been delayed on several occasions. After having been granted 14 days in which to prepare a response to the no-confidence motion, the prime minister, Lord Tu'ivakano, took five days to read out his response in parliament, leading to accusations from the opposition of playing for time. However, a veteran pro-democracy campaigner, Samiuela 'Akilisi Pohiva of the Democratic Party of the Friendly Islands, which submitted the no-confidence motion, has now demanded the right to respond to Lord Tu'ivakano's defence before a vote is held.

  This would be Tonga's first no-confidence vote since the country's first democratically based elections in December 2010. With Tonga still on the path to democracy, the procedural basis for holding no-confidence votes appears unclear, leading to plenty of scope for confusion. Indeed, the deputy prime minister, Samiu Vaipulu, has claimed that the vote should not go ahead owing to a lack of established rules. The departure of the parliamentary speaker, Lord Lasike, has also complicated the situation. After Lord Lasike was convicted of illegal possession of ammunition in July, the Lord Chamberlain ruled that his position should be revoked. Lord Fakafanua was selected to replace Lord Lasike as speaker, and Tonga's nobles have elected Lord Nuku to fill Lord Lasike's parliamentary place.

  Following the numerous delays to the proposed no-confidence vote, the opposition appears to be on the back foot. It has also claimed that it has been denied the opportunity by the state media to present its case to the public. The opposition's drive was further damaged by the decision in July of one of its parliamentary members to accept a position in government.

  August 07, 2012

• Background

  Tonga: Key figures

  King Siaosi Tupouto'a Tupou V

  Head of state; crowned in August 2008.

  Feleti (Fred) Sevele

  The current prime minister, Mr Sevele is the first popularly elected people's representative to hold the position.

  Akilisi Pohiva

  A leading pro-democracy politician.

  August 27, 2008

• Structure

  Tonga: Political structure

  Official name

  Kingdom of Tonga

  Form of state

  Constitutional monarchy, with the monarch retaining significant power

  The executive

  Cabinet, appointed by the prime minister, who is in turn elected by representatives of the legislative assembly

  Head of state

  Tupouto'a Lavaka Ata (King Tupou VI)

  National legislature

  Unicameral Legislative Assembly of 26 representatives comprising the speaker, the cabinet, nine nobles chosen by the 33 nobles of Tonga, and 17 representatives elected by all Tongans aged 21 and over. Ten of the representatives are elected from Tonga'tapu, one from the Niuas (Niuatoputatu and Niuafa'ou), one from 'Eua, two from Ha'apai and three from Vava'u; the nobles are chosen to represent similar areas

  Legal system

  Modelled on the English system. The Court of Appeal is the supreme judicial body, hearing appeals from the Supreme Court. A Privy Council hears appeals in certain types of land cases. Judges are appointed by the king

  National elections

  November 2010; the next election is due in 2013

  Main political organisation

  Tonga Human Rights and Democracy Movement (HRDM), Democratic Party of the Friendly Islands (DPFI)

  Key ministers

  Prime minister, minister for foreign affairs & defence: Lord Tu'ivakano

  Deputy prime minister, minister for justice, transport & works: Samiu Kuita Vaipulu

  Agriculture, forestry, fisheries & food: Sangster Saulala

  Education, women's affairs & culture: Ana Maui Taufe'ulungaki

  Finance & national planning: Lisiate Akolo

  Health: Lord Tu'i'afitu

  Justice & public enterprises: William Clive Edwards

  Lands, survey & natural resources: Lord Ma'afu

  Police, prisons & fire services: Lisiate 'Akolo

  Tourism: Viliami Latu

  Training, employment, youth & sport: Fe'aomoeata Vakata

  Governor of Ha'apai

  Lord Havea Tu'iha'angana

  Governor of Vava'u

  Lord Luani

  Governor of the National Reserve Bank

  Siosi Cocker Mafi

  October 23, 2012

Economy:

• Background

  Tonga: Economic background

  Gross domestic product by sector(a)
  (T$ m; constant 2000/01 prices; factor cost)
  	2002	2003	2004	2005	2006
  Agriculture	65.4	70.0	70.2	67.6	66.6
  Mining	1.0	1.1	1.2	1.4	1.3
  Manufacturing	12.7	12.3	12.7	10.8	9.2
  Electricity, gas & water	4.8	5.3	5.6	5.8	6.1
  Construction	22.9	23.2	22.6	22.1	21.9
  Trade	36.1	37.8	40.8	39.7	37.2
  Transport & communications	19.1	21.9	23.1	22.1	21.7
  Finance	27.0	27.5	28.8	30.0	31.1
  Public administration	42.2	39.4	36.6	34.9	46.9
  Other	24.5	24.9	25.2	25.6	26.0
  Real GDP	247.5	255.1	258.0	252.3	260.3
  (a) Fiscal years ending June 30th.
  Source: Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries.

  Download text file (csv format)

  August 27, 2008

• Structure

  Tonga: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011b	2012b
  GDP at market prices (T$ bn)	0.7	0.7	0.7	0.8	0.8
  GDP (US$ bn)	0.3	0.3	0.4	0.4	0.4
  Real GDP growth (%)	2.7	0.0	0.0	0.0	1.1
  Consumer price inflation (av; %)	10.4	1.4	3.6	6.3a	3.1
  Population (m)	0.1	0.1	0.1	0.1	0.1
  Exports of goods fob (US$ m)	10.9	8.4	9.0b	10.8	11.4
  Imports of goods fob (US$ m)	-163.4	-139.6	-114.2b	-108.5	-100.9
  Current-account balance (US$ m)	-66.0	-54.2	-29.9b	-16.8	-37.6
  Foreign-exchange reserves excl gold (US$ m)	69.8	95.7	104.5	143.3	106.4
  Total external debt (US$ m)	88.7	104.5	107.7	115.3a	123.9
  Debt-service ratio, paid (%)	3.5	2.7	4.6	3.9a	4.3
  Exchange rate (av) T$:US$	1.94	2.03	1.91	1.73a	1.74
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2010ab	% of total	Components of gross domestic product 2009	% of total
  Agriculture	16.6	Private consumption	79.0
  Public administration	10.7	Government consumption	15.6
  Trade	12.8	Fixed investment	20.6
  Finance	6.9	Stockbuilding	0.1
  Construction	6.7	Exports of goods & services	10.4
  Transport & communications	6.3	Imports of goods & services	46.3
  Electricity, gas & water	2.1
  Manufacturing	8.6
  Mining	0.2
  Principal exports fob 2010a	T$ m	Principal imports cif 2010a	T$ m
  Fish	10.2	Food, animals, beverages & tobacco	88.3
  Root crops	0.9	Fuels, minerals & chemicals	91.2
  Squash	0.6	Machinery & transport equipment	62.0
  Main destinations of exports 2010c	% of total	Main origins of imports 2010c	% of total
  Hong Kong	26.5	Fiji	31.6
  US	17.7	New Zealand	22.3
  Fiji	10.6	Japan	11.0
  Samoa	8.9	US	10.8
  New Zealand	7.8	Australia	5.6
  a Asian Development Bank. b Fiscal year (ending June 30th). c IMF.

  Download the numbers in Excel

  Download text file (csv format)

  October 23, 2012

• Outlook

  Tonga: Country outlook

  Tonga: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: It is unclear whether King Tupou VI fully backs Tonga's gradual embrace of democracy, but there would be strong resistance to any attempt to reverse the changes orchestrated by his predecessor. The island kingdom will experience a period of greater political volatility in the 2013-14 forecast period following the expiry in May 2012 of an 18-month moratorium on no-confidence motions against the government. The opposition Democratic Party of the Friendly Islands (DPFI) looks likely to try to bring down the government as part of a push to advance democratic reforms. In view of the tsunami in 2009 and the country's move towards democracy, donor countries are likely to remain generous towards the island kingdom in 2013-14. The Economist Intelligence Unit forecasts that real GDP growth will average 1.3% in 2013 and 1.4% in 2014. The trade balance will improve, but growth will continue to be constrained by weak inflows of remittances. The annual inflation rate will slow to 3.1% in 2012, from 6.3% in 2011, partly owing to the fact that there will be only small rises-or even falls-in many global commodity prices. Inflation will average 4.1% in 2013-14.

  DOMESTIC POLITICS: The country looks set to experience greater political volatility in 2013-14, following the expiry in May of an 18-month moratorium on no-confidence motions against the government. The DPFI, led by a veteran pro-democracy campaigner, Samiuela 'Akilisi Pohiva, submitted a no-confidence motion on June 18th, which gained further momentum with the resignation of three DPFI cabinet members in support of the planned vote. Although the vote was repeatedly delayed on procedural grounds, and was ultimately narrowly defeated in early October, it is likely to presage an intensification of friction between the government and the opposition. Confidence votes are part of the democratic process, but there is a danger that their overuse in an immature system could undermine stability, as has happened in several other Pacific island countries. The confidence vote and events in its aftermath suggest that the DPFI intends to try to bring down the government as part of a push for further democratic reforms. Mr Pohiva (who enjoys strong public support) and the DPFI argue that the government does not have the trust of the people and has made (unspecified) unconstitutional decisions. Although Mr Pohiva was originally amenable to working with the government, he now appears keen to dispel the impression that he is close to Tonga's nobles, who are seen as opposing the country's move towards democracy. Following the opposition's defeat in the confidence vote, Mr Pohiva said that the DPFI might bring criminal charges against the prime minister and other members of the government for alleged spending improprieties. The division between the directly elected and noble members of parliament is likely to remain a source of significant political tension in the next two years. The death on March 18th of King Tupou V and the succession of his brother, Tupouto'a Lavaka Ata, is unlikely to result in the reversal of the island kingdom's progress towards democracy. Nonetheless, King Tupou VI's assumption of the crown may be a cause for concern among some. The new monarch is not short of government experience, having served as the country's prime minister in 2000-06. However, that period was marred by public-sector strikes, economic mismanagement and public agitation for greater democracy. Although the new king's stance on the country's gradual embrace of democracy is not clear, there would be strong public resistance to any attempts to roll back the changes orchestrated by King Tupou V. The next general election is due to be held in 2013, but there are signs that the opposition is determined to topple the government sooner. Tonga's nobles retain strong political influence. However, the DPFI is showing signs of beginning to function as an effective opposition party.

  INTERNATIONAL RELATIONS: The island kingdom's diplomatic relations with New Zealand will remain testy in 2013-14. Ties were put under strain early this year, following comments allegedly made by Tonga's auditor-general, Pohiva Tuionetoa, about New Zealand's foreign minister, Murray McCully. Mr Tuionetoa had alleged that funds provided by New Zealand and Australia to help to fund Tonga's 2010 general election had gone missing, but New Zealand's investigation failed to find any evidence of fraud, instead blaming accounting errors. The prime minister, Lord Tu'ivakano, and the finance minister, Sunia Manu Fili, tried to advance a motion in parliament in February to dismiss Mr Tuionetoa for misconduct, in a step that some sources said was taken after pressure had been brought to bear by New Zealand officials.

  POLICY TRENDS: The effects on government revenue of the global economic downturn could leave the island kingdom even more heavily dependent on financial assistance from its main international donors. However, in view of the tsunami in 2009 and the country's progress towards democracy, donor countries are likely to remain generous towards the island kingdom in 2013-14. The Tongan government aims to consolidate its financial position in the early part of 2013-14. According to the Ministry of Finance and National Planning's budget statement for fiscal year 2012/13 (July-June), total spending (excluding net lending) is set to contract by around 6% compared with the estimated outturn for 2011/12, which in turn represented an 8% decline relative to 2010/11. Total revenue (excluding grants) is forecast to decline by 0.5% in 2012/13, following a contraction of 1% in 2011/12. The government forecast an overall fiscal surplus of T$1.2m (US$690,000) in 2012/13. This would compare favourably with the previous two fiscal years: the budget deficit stood at T$57.3m in 2010/11 and T$23.7m in 2011/12. However, parliament has subsequently passed a supplementary budget that increases spending in 2012/13 by T$4.1m. In addition, the government's projected improvement in its fiscal performance, if achieved, will require significant external budgetary support in the form of grants. We expect the public accounts to remain in the red in 2013-14, reflecting continued weak domestic economic activity. Although the government is reining in expenditure, it will need to cut spending further if it is to eliminate the budget deficit. The IMF has encouraged the government to broaden the tax base and improve its oversight of expenditure. According to the Fund and the World Bank, the government's deficit and foreign borrowing put it at high risk of debt distress. Moreover, owing to its precarious fiscal position the government has little room for manoeuvre in terms of its ability to fund stimulus measures in the event of an unforeseen economic shock or natural disaster. The National Reserve Bank of Tonga (the central bank) is expected to maintain an accommodative monetary policy setting in 2013 in order to help to boost economic activity. Parliament has passed a supplementary budget authorising an increase in spending of about US$2.4m. The funds will be used to pay for the lease of land for a Bank project to upgrade two airports.

  ECONOMIC GROWTH: We estimate that domestic economic growth is on course to pick up to 1.1% in 2012, reflecting ongoing construction projects, and in particular the completion of the Vunu wharf, which is expected to lead to an increase in the number of cruise ships visiting Tonga. New agri-processing facilities will also support exports. The rate of economic expansion will strengthen slightly in 2013-14, to an average of 1.4% a year, as global growth picks up and unemployment in the US gradually falls. The US is the source of more than 50% of remittances to Tonga, which are typically equivalent to around 40% of GDP. Construction and infrastructure projects driven by foreign aid, as well as tourism, will also boost economic growth. After averaging just 1.4% in 2009, year-on-year consumer price inflation accelerated to 3.6% in 2010 and 6.3% in 2011. The rate of increase in consumer prices has slowed during 2012, with inflation averaging 2.1% year on year in January-March and 1.5% in April-June. We expect it to average 3.1% in 2012, with the slowdown relative to 2011 largely reflecting lower global prices for oil and food. The inflation rate will rise to an average of 4.1% a year in 2013-14. The Bank has announced a US$2.9m grant to Tonga to fund efforts to improve energy efficiency. The grant is part of a ten-year plan to reduce the vulnerability of the country's economy to fluctuations in global oil prices. The Fund has suggested that the government implement a debt-management strategy in order to limit the impact of currency fluctuations on the country's net external-debt position. Having appreciated from T$1.91:US$1 on average in 2010 to T$1.73:US$1 last year, the pa'anga stood at around US$1.74 in mid-October 2012. The currency is forecast to depreciate marginally in 2013, to an average of T$1.75:US$1.

  EXTERNAL ACCOUNT: The current account will remain in deficit throughout 2013-14, reflecting the substantial shortfall in the trade account. According to Tonga's Department of Statistics, the trade deficit in January-March 2012 stood at T$63m, down slightly from T$65m in the year-earlier period. Services exports should be buoyed in 2013-14 by increased cruise-ship traffic linked to the completion of the Vunu wharf. Fluctuations in remittances from Tongans living abroad will continue to have a significant influence on the country's balance-of-payments position.

  October 25, 2012

View detailed map

Country Briefing

Land area

748 sq km

Population

101,134 (November 2006 census)

Major islands

Tonga'tapu group (population 71,260 at 2006 census), Vava'u group, Ha'apai group

Capital

Nuku'alofa (population 23,658 at 2006 census)

Climate

Tropical

Weather in Nuku'alofa

Average annual temperature 21°C; average rainfall 1,500-1,700 mm

Languages

English (official language) and Tongan

Measures

Imperial and metric

Currency

Pa'anga, or Tonga dollar (T$). Average exchange rate in 2010: T$1.91:US$1

Fiscal year

July-June

Time

11 hours behind GMT

Public holidays

January 1st (New Year's Day); April 6th (Good Friday); April 9th (Easter Monday); April 25th (Anzac Day); June 4th (Emancipation Day); July 12th (birthday of the heir to the Tongan throne); August 1st (the king's birthday); November 4th (Constitution Day; holiday on November 5th); December 4th (Tupou I Day); December 25th (Christmas Day; holiday on December 27th); December 26th (Boxing Day)

July 25, 2012