According to the National Reserve Bank it will reduce financial growth in the short term, but will also boost foreign reserves.
The Governor of the Reserve Bank, Dr. Sione Ngongo Kioa told the bank’s board of directors’ meeting earlier this month that domestic economic activities in February 2018 were affected by the devastation by tropical cyclone Gita.
Kioa said this would also be reflected in the economic activities of upcoming months.
Kaniva News reports foreign reserves increased to $448 million in February 2018, driven by higher receipts of Government grants and cyclone relief funds from development partners and insurance payouts.
Economic indicators were mixed. Agricultural exports declined, mainly driven by the decrease in the volume of root crops such as cassava and giant taro. Exported marine products, particularly tuna, rose.
Individual housing and business construction loans remained positive despite the decline in business manufacturing loans.
However, container registrations decreased as both business and private containers fell. Vehicle registrations for cars and other light vehicles also fell. There was also decline in air arrivals.
The Reserve Bank said foreign aid and higher levels of remittance meant levels of foreign reserves would remain at comfortable levels.
The Bank warned that this would be offset by the beginning of the government’s repayment of the principal loan to China’s Export-Import Bank.
The Bank’s board of directors said it would maintain its current monetary policy measures of encouraging further lending to the growth sectors, in order to support economic growth and the recovery from Tropical Cyclone Gita.
The Economist Intelligence Unit predicted that reconstruction work would boost economic activity in Tonga into next year. However, this would be offset by the loss of crops and a fall-of in tourism.
The International Monetary Fund said economic damage from Cyclone Gita equalled about 30 percent of GDP, particularly in the agriculture and tourism sectors.
Photo file. Cyclone Gita devastation in Tonga