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Tonga Tonga

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Tonga

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EconomicPoliticalStructural

Tonga – Quick View
ECR score16.43 (Mar 2011)
ECR rank165 (Mar 2011)
Economic
GDPUSD 0.15 billion
GNI per capita PPP, 2010USD 4,038
FDI inflow, 2009USD 15 million
Inflation 2010 (Q3)0.05%
Central bank assets, 2010USD 104.08 million
Unemployment rate, 20035.2%
Government deficit, 2009 (P)USD 32.86 million
Tax revenue, 2010 (P)USD 57.09 million
Political
Government typeConstitutional Monarchy
Recent political crisisNA
Economic freedom score118th
Freedom of information score89th
Corruption perception index101st
Structural
Birth rate, 201026.5 per '000
Population balanceUnder 14 years – 37.9 %
Population balanceOver 60 years - 8.2 %
Life expectancy yearsMale – 69 years
Life expectancy yearsFemale - 75 years
Mortality rate, 20086.6 per '000
Literacy rate99%
Internet access6.9%

[Top] Economic Overview

Tonga's economy is growing at a slow pace. Tonga’s economy depends mainly on agriculture, fishing, and tourism. Fish, squash and manufacturing are the major exports of the country. The major exporting countries are Australia, United States and Japan.

Gross domestic product (GDP)

According to estimates, GDP for 2010 was registered at TOP 0.29 billion, as compared to TOP 0.288 billion in 2009.

Tonga GDP per capita

(Source: imf.org)

GDP growth rate

Tonga’s GDP grew at 2.0% from 2007 to 2008. However, the country’s economic situation in the last two years showed a downfall, declining from 2% in 2008 to -1.2% in 2010.

Tonga Real GDP growth rate

(Source: Reserve bank of Tonga)

Gross national income (GNI)

The country’s GNI per capita, PPP was recorded at USD 4,038 for 2010, as compared to USD 3,648 in 2005.

Tonga GNI per capita at PPP

(Source: UNDP)

Tax rates

The Government of Tonga imposes a corporate income tax of 25.0%, a value added tax (VAT/GST) at 15.0% and a personal income tax at 10.0%.

A company whose annual turnover exceeds T$100,000 needs to register for consumption tax, which is charged at a rate of 15%.

The business income tax rates are:

Resident Company

Non-resident Company

Income

Tax Rate

Income

Tax Rate

Under TOP100,000

15%

Under TOP 50,000

37.5%

Above TOP100,000

30%

Above TOP 50,000

42.50%

(Source: pitic.org, doingbusiness.org)

Inflation

In Q4 2010, inflation rate was registered at 0.05%, as compared to 0.4% in same period of 2009. Tonga Inflation Rate

(Source: national statistics of Tonga)

FDI inflows

Foreign Direct Investment (FDI) for 2009 registered by Tonga was USD 15 million, as compared to USD 6 million in 2008.

Tonga FDI Inflow

 

(Source: UNCTAD)

Central bank assets

The table below displays the total assets of the Central Bank of Tonga:

Assets of Central Bank of Tonga (TOP million)

 

2010

2009

Official foreign reserves

170.5

136.3

IMF currency subscription

15.2

16.6

Claims on central government

0.0

0.0

Other Assets

14.3

14.2

Total Assets

200.0

167.0

(Source: Reserve bank of Tonga)

[Top] Financial Indicators & Government Financial

Consumer price index (CPI)

The CPI for 2010 was registered at 98.3, as compared to 94.9 in the previous year. This rise in CPI is mainly due to an increase in the prices of imported transportation and imported food.

Tonga Consumer Price Index

Base October 2010 = 100

(Source: National Statistics of Tonga,Reserve Bank of Tonga)

Interest rates

Interest rate (%)

Year

2010

2009

Saving Deposits

1.52

2.06

Term Deposits

 

 

3 months

4.14

5.90

6 months

4.31

5.96

12 months

4.61

6.33

24 months

4.73

6.58

36 months

4.74

6.64

48 months

5.58

6.74

(Source: Reserve bank of Tonga)

Money supply

According to the Central Bank of Tonga, M1 in 2010 was recorded at TOP 90.1 million, M2 at TOP 291.5 million and Quasi-Money at TOP 201.4 million.

Tonga Money Supply

(Source: Reserve bank of Tonga)

Government borrowings

From 2002 to 2006, total expenditure showed increasing trend. However, there was sudden fall in expenditure in year 2006 to 2008 from TOP 160.0 million to TOP 149.1 million. As of 2009, total expenditure was projected at TOP 207.8 million.

Tonga Total Expenditure

(P – Projected)

(Source: Reserve bank of Tonga)

Total debt

Tonga Total debt

(Source: Reserve bank of Tonga)

Official exchange rate

USD per TOP for 2010 was registered at 0.51. From 2006 to 2008 the exchange rate increased from 0.48 to 0.54.

Tonga Exchange Rate

(Source: Reserve bank of Tonga)

Government finances

Fiscal balance

Fiscal deficit for 2009 is projected at TOP 65.9 million.

Tonga Fiscal Balance

(P – Projected)

(Source: Reserve bank of Tonga)

Total revenue

Projected total revenue generated by the government of Tonga was recorded for 2010 at TOP 136.9 million.

Tonga Total Revenue

(P – Projected)

(Source: Reserve bank of Tonga)

Tax revenue

Tax revenues generated in Tonga decreased by 7.89% for 2010 and amounted to TOP 109.7 million.

Tonga Tax Revenue

(P – Projected)

(Source: Reserve bank of Tonga)

Current account balance

In 2010, the current account registered a deficit of TOP 32.5 million. However, the current account balance has improved consistently by TOP -58.6 to -32.5 million, since 2008 to 2010.

Tonga Current Account Balance

(Source: Reserve bank of Tonga)

Balance of payments

Tonga's balance of payments in 2010 was registered at TOP 34.2 million, decreasing 27.39% from the 2009 figure of TOP 47.1 million.

Balance of Payments (TOP million)

 

2010

2009

Current account

-32.5

-49.8

Capital account balance

37.9

69.6

Other items, net

28.8

27.4

Overall balance

34.2

47.1

(Source: Reserve bank of Tonga)

[Top] Labour Force and Employment Overview

The labourforce in Tonga was recorded at 41,582.2 people in 2008, increasing 0.37% from the previous year’s 41,430.5 labour population.

Tonga Labour Force

(Source: worldbank.org)

Labour force participation rate

Total Labour force participation rate in Tonga was 64% for 2008. Specifically, for females, the participation rate was 53% while for males it was 75%.

(Source: World Bank, World Bank)

Unemployment rate

The country’s unemployment rate for 2003 was registered at 5.2%.

(Source: spc.int)

[Top] Political Stability

Government stability

Tonga is the last Polynesian Kingdom in South Pacific region with a constitutional monarchy. The Prime Minister and deputy prime minister are appointed by the monarch. The cabinet consists of 14 members of whom 10 are selected by the monarch for life and the remaining four are appointed amongst elected representatives of the legislative assembly for a term of three years. The Privy Council of the country is comprised of the Monarch, the cabinet and two governors.

The Legislative Assembly (Fale Alea) is unicameral with 32 seats of which 14 are reserved for the cabinet ministers, 9 are nobles selected from among the 33 nobles and 9 are elected by popular vote to a three-year term.

(Source: estandardsforum.org, EIU)

There are no major political parties in the country, but the parties that hold seats in the parliament are:

·         Human Rights and Democratic Movement

·         Independents

·         The People's Democratic Party

(Source: fco.gov.uk)

Regulatory environment

Tonga’s economic freedom score is 55.8, making its economy the 118th freest in the 2011 Index. Tonga ranks 23rd out of 41 countries in the Asia–Pacific region. Tonga recorded one of the largest score gainer in the 2011 index.

Tonga Economic Freedom Indices

(Source: heritage.org)

Corruption perception

The Corruption Perceptions Index (CPI) is a survey to measure the perceived level of corruption across countries worldwide. Tonga is ranked 101st on this list with a score of 3.0. This indicates a high level of corruption prevails in the country.

(Source: transparency.org)

Freedom of information

World Press Freedom Index 2010 ranks Tonga at 87th, with a score of 23.75 indicating the media in Tonga is moderately restricted. Most of the television and radio channels are owned by government of Tonga.

(Source: rsf.org, bbc.co.uk)

Newspapers:

·         Tonga Chronicle (state-owned)

·         Times of Tonga (private)

·         Matangi Tonga (private)

(Source: bbc.co.uk)

Judicial system

The judiciary system of the country is independent and derived from the english system. Local disputes are adjudicated by the village elders. The highest positions held by the judges are generally foreign nationals and judges cannot be dismissed during their terms.

Court system in the country is comprised of:  

·         Privy Council

·         Court of Appeal

·         Supreme Court

·         Police magistrate's court

·         Land Court.

The monarch’s Privy Council deals with the cases related to disputes regarding titles of aristocracy and estate boundaries and also hear appeals from the Land Court. Law in the country inhibits random arrests, detention and torture and these prohibitions are adhered. The police in the country have rights to arrest suspects without a warrant and the detainees are brought before a local magistrate within 24 hours of arrest. The trials in the country are public.

(Source: estandardsforum.org)

[Top] Demographic Overview

Total population

The total population of Tonga for 2010 was 103,365 people.

(Source: spc.int , population data)

Gender balance

As of mid-year 2010, Tonga’s total population consisted of 51% males and 49% females.

Tonga Population by Gender

Median age

Estimated median age for 2010 was 20.5 years and the total fertility rate for the year was recorded at 4.2%.

(Source: spc.int , population data)

Population by age group

The majority of the population, about 53.9% fall under the age group of 15 to 59 years. Around 37.9% people are 0-14 years of age. The 65 and above age group constitutes 8.2 % of the total population.

Tonga Population by age group

(Source: spc.int)

Life expectancy

The average life expectancy at birth in Tonga for males is 69 years and for females it is 75 years (2008).

(Source: World Bank, World Bank)

Birth rate

The crude birth rate (per thousand) in Tonga is estimated at 26.5.

(Source: spc.int)

Mortality rate

The mortality rate of infants (per thousand live births) was registered at 17 in 2009.

(Source: World Bank,)

Migration and urbanisation

In 2011, there are 1,711 net migrants and the crude net migration rate (per thousand) is registered at -16.6.

The urban population has grown at an annual rate of 0.5%. While, the rural population grew at a slower rate of 0.4% per year.

(Source: spc.int)

Human development index (HDI)

The country ranks 85th on the Human Development Index 2010 conducted by the United Nations. The HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and having a decent standard of living (measured by purchasing power parity, PPP, income).

(Source: UNDP)

[Top] Soft Infrastructure

Literacy Rate

In 2009, the literacy rate was 99.0% for 15 years and above.

Education system

Education in Tonga is compulsory from age 5 years to 14 years. Primary school begins at the age of 5 years and lasts for six years.

School

Beginning Age

No. of Schooling Years

Student/ Teacher Ratio

Primary

5 years

6

20:1

Secondary

11 years

6

14:1

The reference language for primary education is Tongan, while the language of instruction for secondary education is English.

(Source: estandardsforum.org)

Healthcare resources

The Healthcare system in Tonga is administered by the Health Ministry, which operates on four main objectives:

·         Formulation and administration of policies

·         Preventive health services

·         Curative health services

·         Dental health services

Healthcare services are provided free of charge, and are accessible to majority of the people. Preventive services and curative services are delivered through 14 health centers and 34 maternal health clinics.

There are 4 main hospitals across the country:

Hospital

Location

No. of Beds

Vaiola Hospital

Nuku’alofa

191

Prince Ngu’s Hospital

Vava’u

61

Niu’ui hospital

Ha’apai

28

Niu’eki hospital

Eua

16

(Source: wpro.who.int)

In 2008, the total expenditure on healthcare amounted to USD 11.3 million, of which government expenditure accounted for 68.7% and private firms constituted 31.3%.

(Source: who.int)

[Top] Hard Infrastructure

Roadways

The country has total 680 km of roads of which 27.1% are paved.

(Source:estandardsforum)

 

Ports

In Tonga there are three ports in: Port of Neiafu (Vavau), Port of Nukualofaand Port of Pangai.

(Source:worldportsource.com)

 

Airports

The following are the airports in the country:

Town

Airport name

Runway Length (ft.)

Ha'apai-Lifuka Island

Ha'apai-Lifuka

3,900

Niuatoputapu

Niuatoputapu

2,300

Nuku'alofa

Fua'amotu Intl

8,700

Vava'u

Vava'u

5,500

 

(Source: aircraft-charter-world)

 

Telecommunications network

In 2008, there are 8,400 people, 6.9% of the total population, who use internet services.

The number of fixed telephone lines in Tonga has increased from 13,000 in 2004 to 31,000 in 2009, registering a compunded annual growth rate (CAGR) of 19%. The usage of fixed telephone line has increased from 12.85 per 100 inhabitants in 2004 to 29.82 per 100 inhabitants in 2009.        

(Source: ITU)

The number of mobile cellular subscriptions rose from 16,400 in 2004 to 53,000 in 2009, registering a CAGR of 26.4%. The ratio of mobile cellular subscriptions to fixed telephone lines was 1.7:1, indicating that the amount of mobile cellular usage in the country is high as compared to the fixed telephone line usage.

(Source: ITU)

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