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2019-20 National Budget Statement

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2019-20 National Budget Statement Government of Tonga Budget Statement for year ending 30th June 2020 2019/20 1. FOREWORD _________________________________________________________________________ 3 2. INTRODUCTION _____________________________________________________________________ 5 3. MACROECONOMIC OUTCOMES AND OUTLOOK ______________________________________ 6 3.1 Global and Regional Highlights ________________________________________________________________________ 6 3.2 Domestic Economy and Outlook ________________________________________________________________________ 6 3.3 Fiscal Policy and Measures ____________________________________________________________________________ 8 3.3.1 Fiscal policy/anchors and position _________________________________________________________ 8 3.3.2 Summary of Overall Budget in GFS Format _________________________________________________ 9 3.3.3 Debt Position ________________________________________________________________________ 10 3.4 Monetary Policy Actions _____________________________________________________________________________ 10 3.5 Risks _____________________________________________________________________________________________ 11 4. GOVERNMENT PRIORITY AGENDA 2019-2022 ________________________________________ 12 5. BUDGET ESTIMATE AT A GLANCE 2019/20 ___________________________________________ 14 5.1 SUMMARY OF GOVERNMENT BUDGET BY PRIORITY AREAS ____________________________________ 14 5.2 DETAILED BUDGET ALLOCATION BY PRIORITY AREAS ________________________________________ 15 5.3 RECOVERY FROM TROPICAL CYCLONES GITA AND IAN ________________________________________ 16 6. GOVERNMENT BUDGET: FUNDING ALLOCATION ___________________________________ 17 6.1 RECURRENT BUDGET _______________________________________________________________ 17 6.1.1 Recurrent Expenditure by Ministry _______________________________________________________________________ 17 6.1.2 Recurrent Expenditure by Category ______________________________________________________________________ 18 6.1.3 Recurrent Expenditure by location _______________________________________________________________________ 19 6.1.4 Recurrent Revenue by Ministry __________________________________________________________________________ 19 6.1.5 Recurrent Revenue by Category _________________________________________________________________________ 20 6.2 DEVELOPMENT BUDGET ____________________________________________________________ 22 6.2.1 Aid Funded Project Expenditure by Ministry _______________________________________________________________ 22 6.2.2 Development Expenditure by Location ____________________________________________________________________ 23 6.2.3 Development Expenditure by Development Partners _________________________________________________________ 25 7. CONCLUSION _______________________________________________________________________ 26 8. ANNEX I: MACROECONOMIC AND SOCIAL OUTCOMES AND OUTLOOK ______________ 28 8.1 GLOBAL AND REGIONAL HIGHLIGHTS __________________________________________________ 28 8.2 GROWTH IN TONGA COMPARED TO THE REGION __________________________________________ 29 8.3 DOMESTIC ECONOMY & SOCIAL OUTCOMES AND OUTLOOK FOR TONGA ______________________ 30 8.3.1 Main drivers of growth in 2018/19 ___________________________________________________________________ 31 8.3.2 Other GDP sectoral performance and medium-term outlook _______________________________________________ 37 8.3.3 Fiscal outlook ___________________________________________________________________________________ 42 8.3.3.1 Current Fiscal Outcomes, Budget projection and Medium-Term Fiscal Targets _________________ 42 8.3.3.2 Debt Peformances __________________________________________________________________ 45 8.3.3.3 Budget 2019/20 in the GFS Format ____________________________________________________ 48 8.3.4 Risks __________________________________________________________________________________________ 55 8.3.5 Monetary Policy Outcome and Balance of Payments _____________________________________________________ 56 8.3.6 Social Development _______________________________________________________________________________ 63 8.3.7 Tonga Selected Indicators _____________________________________________________________________________ 68 9. ANNEX II: BUDGET CONTRIBUTION TO THE GPA 2019/20 ____________________________ 72 10. ANNEX III: REVENUE (BOTH RECURRENT AND DEVELOPMENT) FOR 2019/20-2021/22 _ __________________________________________________________________________________ 77 11. ANNEX IV: DEVELOPMENT AID CLASSIFICATION BY LOCATION __________________ 78 11.1 Aid Funded Project Expenditure by Development Aid Classification (DAC) ________________________________________ 78 11.2 Development Expenditure by Location ____________________________________________________________________ 80 12. ANNEX V: TROPICAL CYCLONE GITA AND IAN RECOVERY REPORT ______________ 83 13. ACRONYMS ______________________________________________________________________ 87 MINISTRY OF FINANCE (MOF) 1 Government of Tonga Budget Statement for year ending 30th June 2020 2019/20 List of Tables: Table 1 : Fiscal Anchors and Position .................................................................................................... 8 Table 2 : Government Financial Statistics (GFS) Summary Table (provisional) ................................. 10 Table 3 : Summary of Government Budget by Priority Areas .............................................................. 15 Table 4 : MDAs Allocation (Expenditure, $m) .................................................................................... 18 Table 5: Total Recurrent Budget (Expenditure, $m) by Category ........................................................ 19 Table 6: Total Recurrent Budget by Location ($m) .............................................................................. 19 Table 7 : MDAs Allocation (Revenue, $m) .......................................................................................... 20 Table 8: Total Recurrent Budget (Revenue, $m) by Category ............................................................. 21 Table 9: Total Development Budget by type ($m) ............................................................................... 22 Table 10: Total Development Budget (Aid Funded Project Expenditure) by MDA (T$m) ................. 22 Table 11: Total Development Budget (Expenditure) by Location ($m) ............................................... 23 Table 12: Total Development Budget (Expenditure) by Development Partners ($m) ......................... 25 MINISTRY OF FINANCE (MOF) 2 Government of Tonga Budget Statement for year ending 30th June 2020 2019/20 1. FOREWORD The 2019/20 budget is guided by the theme: ‘Our Country Our People.’ This is with the objective that all work carried out by Government funded by this budget is aimed to benefit all our people in Tonga, the country that we love and cherish. We are therefore calling on everyone in the society to work in collaboration to develop our people and our country. With continued vigor and great enthusiam, by God’s guidance and grace, our nation will get through difficult times and overcome any challenges ahead. This year’s budget will reinforce Government plans and efforts towards meeting its development aspirations to raise the living standards of all Tongans to attain the National Vision of ‘A more progressive Tonga, supporting a quality of life for all.’ The strategic thrust of the 2019/20 Budget recognizes and gives attention to relevant key issues to the budget raised by His Majesty’s closing address in Parliament on 28th February, 2019. These issues emphasize the importance of: preparedness to ensure resilience at times of natural disasters; accountability, transparency and reporting of aid assistance from Development Partners for recovery; Complete the reconstruction and recovery efforts following TC Gita & TC Ian; Establish independent commissions on the passport and the Nuku’alofa riot; Increased effort to address the issues of illicit drugs and deportees; and Improve language support to prepare Tongans for overseas employment. Government draws focus on nine key areas of priority as Government Priority Agenda (GPA) to guide development works and initiatives in the medium term, 2019-2022. These areas are (i) public sector system reform; (ii) development of informal sector; (iii) combat and address the impacts of illicit drugs; (iv) improve beautification program (road & infrastructure development); (v) digital government framework; (vi) Quality Education; (vii) Health (NCDs, CDs and UHC); (viii) Support Energy Support; and (ix) Land Administration and Management. The rationale behind the GPA is to promote a more dynamic and inclusive economy. This is through empowering of the informal sector to improve economic stability and individual income including developing the agriculture and fisheries sectors with better infrastructure to increase export products. Simultaneously, an ongoing effort is made to establish secure and affordable energy source and preserve the environment. At the same time, there is a need to expedite public sector system reforms as well as digitization of government processes and systems. The issue of illicit drugs needs to be urgently addressed given its large negative impacts on the Tongan society. Health and Education remain as priorities for human development and essential necessity. Land management and administration at the same time is a critical priority area given that land is Tonga’s most important asset
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