The FY 2022 budget is guided by the theme: ‘By God’s grace we are saved through faith’.
‘Ko e kelesi pē, ‘oku tau Mo‘ui aí, ‘i he‘etau Tuí´’.
The rationale behind this theme is a proclamation that only through God’s grace that Tonga has survived the great adverse impact of the pandemic and is amongst the few countries in the globe that is COVID free.
Government will continue to prioritise prevention and protection against the COVID-19 pandemic, as the first and foremost priority considering the context of the Tongan economy including vulnerability and limited resources. Although Tonga is fortunate to remain COVID-19 free hitherto, Government needs to remain vigilant especially in a situation where the virus enters our shore. These include close monitoring of the border and the extension of quarantine to 21 days for repatriated passengers albeit the revolving cost implications and negative impacts on the economy.
The virus continues to have a profound impact on all societies and economies with many disruptions to everyday life. It is pleasing to note the availability of vaccines against COVID-19 which are slowly being rolled out across the world. This significant development is expected to gather momentum in 2021 and continue to strengthen further in 2022.
FY 2019 recorded an actual positive growth of 0.7 percent while FY 2020 is projected at negative 0.8 percent mainly due to the prolonged impacts of COVID-19. This is an improvement from the initial projection of negative 2.9 percent for FY 2020 which is attributed to the TC Gita and TC Harold reconstruction and other major infrastructure development activities. The medium term (FY 2022 to FY 2024) is projected at an average growth of 2.6 percent, reflecting the impacts of the Government Stimulus Package, TC Gita and TC Harold reconstruction activities and other major development projects scheduled to be implemented in 2022.
Government has approved a policy to commence preparatory works to establish a Land Transport Authority (LTA) to be responsible for road infrastructure maintenance and development in Tonga. A road maintenance fund has been created under the Road Act 2020 which will contribute to the operation of the LTA once it comes into existence.
On the fiscal side, an expected decline in revenue streams lead to a Budget deficit of $38.1 million in FY 2022 with a preferred financing option from additional development grants. Government will continue to execute prudence in fiscal management and to prioritise activities over the medium term. In response, Government like other countries has proactively applied fiscal and monetary policy responses to offset some of the negative economic impacts of COVID-19.
The Government support through the $60 million Economic and Social Stimulus Package rolled out in April 2020 has positively contributed to offset the negative impact of the pandemic. The disbursement of Stimulus funds has supported household income and consumption including vulnerable groups. Support was also provided to businesses including tourism, the hardest hit sector by the pandemic. Government is anticipating a second Economic and Social Stimulus Package to assist with economic recovery.
Going forward, the Government Budget FY 2022 – FY 2024 will build on the current effort and key measures to support medium-term economic recovery, rejuvenate private sector activity, protect and create jobs, and maintain overall macro-fiscal sustainability.
Government will continue to address the Government Priority Agenda (GPA) as approved by the current regime with health as the first priority in view of the COVID-19 pandemic. GPAs are categorized under three (3) thematic areas: A. People Focus: (i) Health; (ii) Illicit drugs and National Security; (iii) Education; B. Economic Recovery: (iv) Economic Development; and C: Resilience: (v) Infrastructure Development; (vi) Energy, Climate Change and Disaster Risk Reduction; and (vii) Public Sector Reform.
We encourage strong coordination and collaboration across Government with all relevant key stakeholders which is paramount for the successful implementation of Government priorities. We are indebted to the ongoing support by our development partners especially during this challenging time.
I wish to conclude with Ephesians 2:8 “for it is by grace you have been saved through faith. It is not the result of your own efforts but God’s gift”.