Tonga

Politics:

• Analysis

  Tonga politics: Quick View - Prime minister announces new cabinet for 2013

  Event

  On January 7th Tonga's prime minister, Lord Tu'ivakano, announced his cabinet for 2013, boosting the number of portfolios under his control.

  Analysis

  The reshuffle is the third time that the prime minister has made changes to the cabinet since the landmark general election of November 2010. The number of cabinet positions remains unchanged at 11, and most individuals have stayed on. However, Lord Tu'ivakano has, in an unusual move, given himself the most portfolios at four, adding the police, fire services and prisons, and information and communications portfolios to his existing roles at the helm of the foreign affairs and trade and defence ministries. Other ministers each hold one portfolio.

  As with the previous reshuffle, in mid-2012, the prime minister's move represents an attempt to strengthen the performance of the cabinet and the government in the face of greater political uncertainty and popular sentiment for democratic reform. Although the government has performed competently since the 2010 election, the expiry last June of a moratorium on no-confidence motions on the conclusion of the first 18 months of the government's term has raised the stakes. The expiry was followed quickly by an attempt by the Democratic Party of the Friendly Islands (DPFI), led by Samiuela 'Akilisi Pohiva, to bring down the administration. Mr Pohiva hoped to become prime minister after his party's strong performance in the elections, but lost out to Lord Tu'ivakano in post-poll negotiations. Although the no-confidence motion ultimately failed, Mr Pohiva, who enjoys strong public support, remains determined to weaken the government and foster further reform.

  Lord Tu'ivakano appears to see strengthening his own position as key. There is synergy between the portfolios that the prime minister has awarded himself and important projects for Tonga in 2013, including the island kingdom's connection to the international fibre-optic network, and the implementation of the freedom of information policy, both expected in June this year. With important road and urban development projects also expected to be completed in 2013, the infrastructure portfolio remains in the hands of the deputy prime minister, Samiu Kuita Vaipulu.

  January 17, 2013

• 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, information & communications: Lord Tu'ivakano

  Deputy prime minister, minister for infrastructure: Samiu Kuita Vaipulu

  Agriculture, food, forests & fisheries: Sangster Saulala

  Education & training: Ana Maui Taufe'ulungaki

  Finance & national planning: Lisiate Akolo

  Health: Lord Tu'i'afitu

  Internal affairs: Lord Vaea

  Justice & public enterprises: William Clive Edwards

  Lands, survey & natural resources: Lord Ma'afu

  Tourism & commerce: 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

  January 10, 2013

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	1.3
  Population (m)	0.1	0.1	0.1	0.1	0.1
  Exports of goods fob (US$ m)	10.9	8.4	9.0b	9.2	9.7
  Imports of goods fob (US$ m)	-163.4	-139.6	-114.2b	-131.0	-121.9
  Current-account balance (US$ m)	-66.0	-54.2	-29.9b	-41.2	-60.6
  Foreign-exchange reserves excl gold (US$ m)	69.8	95.7	104.5	143.3	114.6
  Total external debt (US$ m)	88.7	104.5	107.7	111.9a	115.8
  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	1.73
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2011ab	% of total	Components of gross domestic product 2011a	% of total
  Agriculture	17.0	Private consumption	90.9
  Others	15.0	Government consumption	17.1
  Trade	12.9	Gross domestic capital formation	37.9
  Public administration	11.7	Stockbuilding	7.1
  Taxes	11.7	Exports of goods & services	17.3
  Construction	10.6	Imports of goods & services	60.9
  Finance	7.4
  Transport & communications	6.2
  Manufacturing	5.9
  Electricity, gas & water	2.6
  Statistical discrepancy	-1.0
  Principal exports fob 2010a	T$ m	Principal imports cif 2010a	T$ m
  Fish	10.2	Fuels, minerals & chemicals	91.2
  Root crops	0.9	Food, animals, beverages & tobacco	88.3
  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)

  January 10, 2013

• 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, King Tupou V. Tonga 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 Tonga. In view of the tsunami that struck Tonga 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 rate of inflation will accelerate from an estimated 1.3% in 2012 to an average of 3.6% a year in 2013-14. Imported inflation will strengthen as the local currency remains steady against the US dollar.

  DOMESTIC POLITICS: The island kingdom looks set to experience greater political volatility in 2013-14, following the expiry in May 2012 of an 18-month moratorium on no-confidence motions against the government. The DPFI, led by 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 presaged 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, it has focused on airing in parliament alleged spending improprieties by members of the government. The DPFI is showing signs of beginning to function as an effective opposition party. The division between the directly elected and noble members of parliament is likely to remain a source of significant political tension in 2013-14. The next general election is due to be held this year.

  INTERNATIONAL RELATIONS: Tonga's diplomatic relations with New Zealand will remain testy in 2013-14. Ties were put under strain last year, following comments allegedly made by Tonga's auditor-general, Pohiva Tuionetoa, regarding 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 then finance minister, Sunia Manu Fili, tried to advance a motion in parliament in February 2012 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. Tonga is developing increasingly close ties with China, thanks in part to the Chinese government's policy of offering generous loans and aid for infrastructure and development projects in Tonga. Relations with China are likely to strengthen further in 2013-14, but there is a risk that controversies over the opaque terms of China's aid will become a political issue that damages the Tongan government's standing. For example, in November 2012 the issue of whether officials had acted improperly in transferring Chinese grant money to Tonga's satellite agency, Tongasat, provoked an extended parliamentary spat between the government and the opposition.

  POLICY TRENDS: The effects on government revenue of the global economic downturn could leave Tonga even more heavily dependent on financial assistance from its main international donors. However, in view of the tsunami that struck Tonga 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 finances to remain in the red in 2013-14, reflecting continued weak domestic economic activity. Although the government is focused on reining in expenditure growth, it will need to cut spending further if it is to eliminate the budget deficit. The IMF has encouraged the government to continue 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. The National Reserve Bank of Tonga (NRBT, the central bank) is expected to maintain an accommodative monetary policy setting in 2013 in order to help to boost economic activity. It will be assisted in its efforts by the diminution of inflationary pressure that took place during 2012. The NRBT's policy stance would be threatened were global prices for oil or food to rise steeply, as Tonga imports almost all of its energy and much of its food. However, our central forecast is that international oil and food prices will decline in 2013.

  ECONOMIC GROWTH: We estimate that Tonga's economic growth picked up to 1.1% in 2012, reflecting ongoing construction projects, and in particular the completion of the Vuna 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 even after declining sharply since 2008 were still equivalent to 14% of GDP in the 12 months to August 2012. Construction and infrastructure projects driven by foreign aid, as well as tourism, will also boost economic growth in 2013-14.

  EXTERNAL ACCOUNT: The current account will remain in deficit throughout 2013-14, reflecting the substantial shortfall on 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 Vuna Wharf. Fluctuations in remittances from Tongans living abroad will continue to have a significant influence on the country's balance-of-payments position.

  January 11, 2013

View detailed map

Country Briefing

Land area

748 sq km

Population

103,036 (2011 census)

Major islands

Tonga'tapu group (population 75,158 at 2011 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 2011: T$1.73:US$1

Fiscal year

July-June

Time

11 hours behind GMT

Public holidays

January 1st (New Year's Day); March 29th (Good Friday); April 1st (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)

January 10, 2013