Asian Development Bank forecasts Tonga will face higher inflation in 2019

The Asian Development Bank has predicted that inflation will rise in Tonga during 2019 because of lingering effects from Cyclone Gita and higher fuel prices.

Overall economic activity was expected to pick up in the first half of the 2019 fiscal year.

Recovery would be driven primarily by government-led cyclone reconstruction and supported by strong growth in private credit, which will spur activity in various sectors of the economy.

However, government reconstruction and rehabilitation projects would shrink the budget surplus in 2019.

The higher volume of imports needed for the projects would increase the budget deficit.

Government finances would also be affected by its intention to start repaying a large loan from China.

The Asian Development Outlook 2018 Update said Government revenue increased only slightly from the 2017 fiscal year as a substantial contraction in grants offset higher tax revenue.

Increased spending driven by higher public sector wages, initial reconstruction expenses, and the maintenance of existing infrastructure is estimated to have narrowed the budget surplus.

Despite this, Tongaā€™s current account was estimated to have recorded a small surprise surplus derived from higher than expected tourism income and emergency assistance following Cyclone Gita.

For more information

Asian Development Outlook 2018 Update

About The Author

Sometimes when a business is growing, it needs a little help.

Right now Kaniva News provides a free, politically independent, bilingual news service for readers around the world that is absolutely unique. We are the largest New Zealand-based Tongan news service, and our stories reach TongansĀ  wherever they are round the world. But as we grow, there are increased demands on Kaniva News for translation into Tongan on our social media accounts and for the costs associated with expansion. We believe it is important for Tongans to have their own voice and for Tongans to preserve their language, customs and heritage. That is something to which we are strongly committed. Thatā€™s why we are asking you to consider sponsoring our work and helping to preserve a uniquely Tongan point of view for our readers and listeners.

spot_imgspot_imgspot_imgspot_img

Latest news

Related news