A short-term assistance programme with $60 million pa’anga has been approved by the Government of Tonga in response to the declaration of a State of Emergency to combat COVID-19
An initial assessment of the overall impact of COVID-19 on the economy estimated loss to its gross domestic product at over $60 million pa’anga for the FY 2020.
According to the Government, t is projected at least GDP loss of over $200 million if the pandemic continues without a stop to the first two quarters of FY2021.
Domestic Revenue as a result is expected to be reduced by $35 million therefore projected for a fiscal deficit in FY2020, and $40m loss of revenue stream for FY2021 with a projected fiscal deficit of $54m.
Without a vaccine to stop the virus, it is projected that the revenue loss and fiscal deficit could be higher.
Over 30 percent of the Economic and Social Stimulus Package is to step-up health care capacity.
The remainder earmarks increased commitments for essential services: transport, security, law and order, relief assistance for affected businesses.
RNZ Pacific reports the government said the package could change over the next three months depending on the course Covid-19 took in Tonga.
There were currently no confirmed cases in the country but the regional situation led to the government implementing a State of Emergency, a closure of the borders, restrictions on gatherings and a temporary lockdown, including a nightly curfew.
Prime Minister Pohiva Tu'i'onetoa said the new package had been established to aid vulnerable groups and people most affected by the current crisis.
The Ministry of Customs and Revenue Chief Executive Kelemete Vahe said every tax imposed on goods and services within Tonga would be deferred until 30 June, except for PAYEE.
Mr Vahe said goods imported to Tonga in order to revive the tourism sector as well as fisheries and agriculture would also be duty free until 30 June.
Around $US426,000 would be used to strengthen food stock, while the Ministry of Fisheries and Agriculture received around $US937,000 from the emergency package.
Over $US2 million had also been allocated to the Ministry of Health, while the Ministry of Education had been given $US1.6 million.
The Reserve Bank put over $US2 million towards Tonga Development Bank soft loans for micro businesses and other groups.
The government also allocated over $US21,000 to the Ministry of Internal Affairs to assist community patrol officers and other community related services.
Retirees will receive over $US42 each along with their monthly allowance for March and April.
Meanwhile, people with disabilities will be offered over $US85 each alongside their allowances, from next week.
Employees who had been laid off from work due to the Covid-19 situation were eligible to receive an allowance which would also be made available next week.