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Country Report Country Report Tonga September 2007 The Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For 60 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 26 Red Lion Square The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road WC1R 4HQ New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7576 8000 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7576 8500 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2007 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Tonga 1 Contents Tonga 2 Summary 3 Political structure 4 Economic structure 4 Annual indicators 5 Quarterly indicators 6 Outlook for 2008-09 7 The political scene 9 Economic policy 11 The domestic economy 12 Foreign trade and payments List of figures 5 Tonga: consumer prices 5 Tonga: foreign trade 7 Tonga: gross domestic product 7 Tonga: consumer price inflation Country Report September 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007 2 Tonga Tonga September 2007 Summary Outlook for 2008-09 The government has moved to calm the frustration felt by many at its failure to implement political reform more quickly by establishing the new tripartite reform committee. The prime minister, Feleti Sevele, has suggested that it will only be after the March 2008 general election that any reforms are implemented. The Ministry of Finance has recently been more upbeat about the state of the economy following the November 2006 riots. However, the repercussions are still being felt in terms of decreased tourism, lack of investor confidence and the collapse of significant business deals. Tonga’s accession to the World Trade Organisation (WTO) on July 27th will result in a drop in trade tariffs, which will see revenues from imports and exports fall sharply. The political scene Tonga’s Legislative Assembly convened on May 31st for the first time since the riots of November 2006. Pressure for political reform!the cause of the rioting! has forced the issue to the top of the government’s agenda and a new parliamentary reform committee, the Parliamentary Tripartite Committee for Political Reform, has been formed. Five members of parliament are accused of sedition in relation to their alleged involvement in the November 2006 riots, and their cases have been referred to the Supreme Court. The state of emergency imposed by the government in response to the riots was extended by another 30 days, for an unprecedented eighth time, in mid-July. Economic policy Ton ga "s WTO accession will see the government’s largest source of revenue! import tariffs!cut sharply. Critics point to the major shortfall in public funding that this will inevitably produce, despite the implementation of a 15% consumption tax. The government recently signed a draft agreement with the Asian Development Bank to secure a loan of up to US$12.4m to improve infrastructure in the capital, Nuku’alofa. The domestic economy The government claims the November 2006 riots directly affected the operations of numerous businesses, amounting to an estimated US$55.7m in losses. The Business Recovery Facility has been set up to assist affected enterprises. In June the government announced that it will buy back the country"s electricity firm, Shoreline. Foreign trade and payments Australian officials suggested recently that the reconstruction process is taking longer than might be expected and offered to add a further A$5m (US$4.4m) to the Business Development Fund. Editors: Hilary Ewing (editor); Gerard Walsh (consulting editor) Editorial closing date: August 24th 2007 All queries: Tel: (44.20) 7576 8000 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule Country Report September 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007 Tonga 3 Political structure Official name Kingdom of Tonga Form of state Constitutional monarchy, with the monarch retaining significant power The executive The king appoints a cabinet, led by a prime minister. Ministers are appointed by the king to serve at his pleasure or until they are allowed to resign. After the March 2005 general election, two of the nine elected nobles" representatives and two of the nine elected people"s representatives were offered cabinet appointments for the first time Head of state King Siaosi Tupou V (who is to be crowned in August 2008) National legislature Unicameral Legislative Assembly with limited powers, comprising the speaker, the cabinet (appointed by the king), nine nobles chosen by the 33 nobles of Tonga, and nine representatives elected by all Tongans aged 21 and over; three of the representatives are elected from Tonga"tapu, one each from Niuatoputatu and Niuafa"ou, two from Ha"apai and two from Vava"u; the nobles are chosen to represent similar areas Legal system Modelled on the English system, with the Privy Council, consisting of the cabinet presided over by the king, sitting as the Court of Appeal National elections March 16th-17th 2005; the next election is due in March 2008 Main political organisation Tonga Human Rights and Democracy Movement (HRDM, formerly the People"s Party) Prime minister, minister for disaster relief, & responsible for the department of communication Feleti Sevele Deputy prime minister, minister for health Viliami Tangi Key ministers Agriculture, forestry, fisheries & food Feleti Sevele (temporary) Education, women's affairs & culture Tevita Hala Palefau Finance Siosiua "Utoikamanu Fo reign affai rs & de fen ce Tu "a Taumoepeau Justice & attorney-general "Alisi Taumoepeau Labour, commerce & industry Lisiate "Akolo Lands, survey & natural resources Honourable Tuita Police, prisons & fire services Siaosi Taimani "Aho Public enterprises Afu"alo Matoto To u r i s m Fineasi Funaki Training, employment, youth & sport Honourable Tu"ivakano Transport Paul Karalus Works Honourable Nuku Governor of Ha'apai Honourable Malupo Acting Governor of Vava'u T"ua Taumoepeau Governor of the National Reserve Bank Siosi Cocker Mafi Country Report September 2007 www.eiu.com © The Economist Intelligence Unit Limited 2007 4 Tonga Economic structure Annual indicators 2002a 2003a 2004a 2005b 2006b GDP at current prices (T$ m)cd 327.0 366.5 389.9 422.7 478.5 Real GDP growth (av; %)cd 9.6 3.1 1.1 -2.2 3.2 Consumer price inflation (av; %)e 10.3 11.6 11.0 8.3 6.4 Population ('000)c 99.8 100.1 100.4 100.8 101.1 Exports fob (US$ m)cd 17.8 17.6 13.9 16.1 15.2 Imports cif (US$ m)cd 61.4 74.3 82.9 105.7 117.8 Current-account balance (US$ m)cd 7.2 -4.9 7.7 -5.8 -18.5 Reserves excl gold (US$ m)e 25.2 39.7 52.2 46.9 48.0 Total external debt (US$ m)c 73.5 86.7 88.7 84.1 n/a Debt-service ratio, paid (%)c 2.5 n/a n/a n/a n/a Exchange rate (av; T$:US$)e 2.20 2.15 1.97 1.94 2.03 a Actual. b Economist Intelligence Unit estimates. c Asian Development Bank. d Fiscal year ending June 30th. e IMF, International Financial Statistics. Main origins of gross domestic product 2006ab % of total Agriculture 25.9 Mining 0.4 Manufacturing 3.2 Electricity, gas & water 2.5 Construction 7.8 Trade 15.4 Transport & communications 5.5 Finance 12.9 Public administration 19.4 Principal exports fob 2005bc T$ m Principal imports cif 2005bc T$ m Fish 10.9 Food, animals, beverages & tobacco 61.9 Squash 8.1 Fuels, minerals & chemicals 61.6 Vanilla 1.1 Machinery & transport equipment 44.3 Main destinations of exports 2006a % of total Main origins of imports 2006a % of total US 41.0 Fiji 29.0 Japan 30.8 New Zealand 27.9 New Zealand 8.5 Australia 7.6 Fiji 3.9 US 8.3 Australia 2.6 China 3.0 a Asian Development Bank. b Fiscal year (ending June 30th). c National Reserve Bank of Tonga. Country Report September 2007 www.eiu.com © The Economist Intelligence Unit Limited
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