Deficit budget announced in Tonga; largest ever spend

RNZ News

04-06-2025

St George Government Building, Nuku'alofa CBD
Photo:
Matangi Tonga
Tonga's 'Aisake Eke Government has produced its first budget, pumping up spending by more than 10 percent compared with last year.
It has some key elements that differ from previous years, such as an assistance boost for some private sector businesses.
Don Wiseman spoke with RNZ Pacific's correspondent, Kalafi Moala, and began by asking where the additional money is going.
KALAFI MOALA:
One of the key things that this government, when they came into being, was declaring and proclaiming changes that they were going to make, compared with, say, the previous government. And one of the things that you've been saying was that they're going to, probably for the first time in Tonga history, give money to the private sector. They've been given the message of private sector development, it is the pathway to economic development, to the future and so on. So in this budget, one of the specific things they've done is assigned quite a bit to private sector development. ...But the whole budget of 992 million plus [pa'anga] - it's the biggest in Tonga's history, more than last year's budget. And also it's a deficit budget. I think, if I can remember this, about 28 million [pa'anga] in deficit. But then the government have said that they are going to pay for this deficit by issuing bonds, public bonds, so I guess they've got it all worked out.
DON WISEMAN:
Public bonds - has Tonga issued bonds before?
KM:
I can't recall when, but yeah, in the last, say, 10 years or so, they've done that.
DW:
In terms of this money going to the private sector. There are no details at all?
KM:
No details other than the fact that they think that fisheries and agriculture is going to be a major focus, particularly on businesses that have already started. For example, things like marketing and setting up pack houses for export. This is the kind of things that they think government is going to help in the development of the private sector.
DW:
That essentially is the only difference from the previous government, despite what they had said about the failures of the previous government.
KM:
That's right. The other thing too, there has been quite
a bit of talk this year about kava
- kava being a product that Tonga wants to focus on exporting. I mean, you've got this ban out of Fiji, out of Vanuatu, quite successfully. And so Tonga is entering the market. And this is another issue, another thing that they're going to help in the private sector development.
DW:
We don't know precisely what they might do in terms of that trade?
KM:
No. But you see, one of the problems that Tonga has been known for over the years is that Tonga has talked about marketing certain products. You remember the days when we were marketing squash, sending to Japan, and to China, and then we ran out, because the complaint has been that Tonga was not able to produce enough for the market. And we've seen that happening to cassava, we've seen it happening to other products, and there's hope that this is not the kind of thing that will happen to kava, that there's an excitement about exporting kava. People are starting to plant kava now, and there's a lot of talk about it. But then are we going to be able to stay and produce enough for the market?
DW:
In terms of education, subsidised loans will be available for non-government schools. What have they got in mind here?
KM:
Well, you see, it's been a normal thing that government's contribution to non-government schools - it's 700 [pa'anga] per head for every student. In other words, they're paying all non-government schools 700 per head per year. And this has been going on up to the last government. So they are wanting to continue this process, but to make sure that it's done and to follow up to make sure that the money goes... not just to the schools to spend on just projects that may not be necessary, but the focus on paying teachers. Because the complaint has been that a lot of teachers of non-government schools are underpaid, and some of them are leaving for greener pastures overseas, and so there's a shortage of teachers in non-government schools. So, yes, they're pledging that they're going to continue to do that.
Photo:
ppart/123RF
DW:
Work is going to go into the nursing school.
KM:
Yes, there's a lot of planning going with that. You know, Tonga now, of course, has what we call the Tonga National University, and so all training, tertiary-type training, is now being under the Tonga National University - teachers training, nursing training, training of seamen, that kind of thing. And so, yeah, there's a lot of funding that will go to that as well.
DW:
And a new hospital - I presume it's a new hospital, on Vava'u.
KM:
That comes under what they call the development budget. You have the recurrent budget, of course, which is part of the budget that goes into carrying the expenses, the current expenses of government. And then you've got the development budget, which goes to projects. And much of the development budget, of course, comes from aid. It goes into building wharfs and hospitals and things like that. And yeah, there's been a lot of calls for Vava'u - that they need to upgrade healthcare in Vava'u - so the hospital is a major focus.