2020 - 2021 BUDGET STATEMENT KO SIHOVA KO HOKU TALITAU’ANGA GOD IS MY REFUGE AND MY FORTRESS Saame 91: Ko e ‘Otua ko Hotau Malu‘anga Psalm 91: God our Protector 1 Ko ia ‘oku nofo ‘i he toitoi‘anga ‘o ‘Elioni,‘Oku mohe ‘i 1 Whoever goes to the LORD for safety, whoever remains he malumalu ‘o Sātai– under the protection of the Almighty, 2 Ko ‘eku lau ē kia Sihova, Ko hoku hūfanga ia mo hoku 2 can say to him, “You are my defender and protector. You talitau‘anga: Ko hoku ‘Otua falala‘anga. are my God; in you I trust.” 3 Tā ko e hele ‘a e tulimanu te ne fakahaofi koe mei ai, Pea 3 He will keep you safe from all hidden dangers and from mei he mahaki faka‘auha ‘oku ‘uakai mai. all deadly diseases. 4 Te ne ‘ufi‘ufi koe ‘aki hono fulufulu, Pea te ke toi ‘i hono 4 He will cover you with his wings; you will be safe in his lalo kapakau: Ko ‘ene fai mo‘oni ko ho pā mo fakaū. care; his faithfulness will protect and defend you. 5 ‘E ‘ikai te ke manavahē ki he nānunga ‘o e pō, Pe ki he 5 You need not fear any dangers at night or sudden attacks ngahau ‘oku puna ‘aho; during the day 6 Ki he mahaki ‘oku ha‘ele ‘i he ta‘ehā, Ki he fakamate 6 or the plagues that strike in the dark or the evils that kill ‘oku tu‘usi ho‘atā. in daylight. 7 ‘E tō ‘i ho tafa‘aki ha toko afe, Mo e toko‘i mano ‘i ho 7 A thousand may fall dead beside you, 10,000 all-round to‘omata‘u ē; Kae ‘ikai ofi kiate koe. you, but you will not be harmed. 8 Ngata pē te ke sio ‘aki ho mata,‘O vakai ‘a e totongi ‘a e 8 You will look and see how the wicked are punished. kau angahala. 9 You have made the LORD your defender, the Most High 9 He ko koe, ‘Eiki, hoku hūfanga– Tā kuo ke fili ‘a ‘Elioni your protector, ko ho nofo‘anga; 10 and so no disaster will strike you, no violence will come 10 ‘E ‘ikai fepaki mo koe ha kovi, Pea ‘e ‘ikai ofi ha tā ki ho near your home. tēniti. 11 God will put his angels in charge of you to protect you 11 He te ne kouna ‘ene kau ‘āngelo telia koe, Ke tauhi koe ‘i wherever you go. ho hala fua pē. 12 They will hold you up with their hands to keep you from 12 Te nau fataki nima koe, Na‘a pākia ‘i he maka ho va‘e. hurting your feet on the stones. 13 Ko e laione mo e ngata te ke mala ai; Ko e laione fita mo 13 You will trample down lions and snakes, fierce lions and e tanini te ke molomoloki. poisonous snakes. 14 Ko e me‘a ‘i he‘ene tu‘u kiate au ‘ene ‘ofa, Ko ia ai, te u 14 God says, “I will save those who love me and will protect fakahaofi ia: Te u ‘ai ke ne mā‘olunga Koe‘uhi ā kuo ne those who acknowledge me as LORD. ‘ilo hoku hingoa. 15 When they call to me, I will answer them; when they are 15 Te ne ui kiate au, pea te u tali; Te u ‘iate ia ‘i he mamahi: in trouble, I will be with them. I will rescue them and Te u hamusi ia mo fakalāngilangi‘i. honor them. 16 Te u ‘ai ‘a e mo‘ui fuoloa ke ne topono ai, Pea te u tuku 16 I will reward them with long life; I will save them.” ke ne māta‘i ‘eku fakamo‘ui. Government of Tonga Budget Statement for year ending 30th June 2021 2020/21 ‘God is my Refuge and my Fortress’ 1. FOREWORD _________________________________________________________________________3 2. INTRODUCTION _____________________________________________________________________4 3. MACROECONOMIC, SOCIAL OUTCOMES AND OUTLOOK_____________________________5 3.1 Global and Regional Highlights ________________________________________________________________________5 3.2 Domestic Economy and Outlook ________________________________________________________________________5 3.2.1 Fiscal policy/anchors and position _______________________________________________________ 7 3.2.2 Summary of Overall Budget in GFS Format ______________________________________________ 8 3.2.3 Debt Position________________________________________________________________________ 10 3.3 Monetary Policy Actions _____________________________________________________________________________10 3.4 Social issues and challenges __________________________________________________________________________11 3.5 Risks_____________________________________________________________________________________________12 4. GOVERNMENT PRIORITY AGENDA (GPA) 2020-2023 __________________________________13 5. BUDGET ESTIMATE AT A GLANCE FY 2020/21________________________________________20 5.1 SUMMARY OF GOVERNMENT BUDGET BY PRIORITY AREAS __________________________________20 5.2 DETAILED BUDGET ALLOCATION BY PRIORITY AREAS ______________________________________21 6. GOVERNMENT BUDGET: FUNDING ALLOCATION ___________________________________23 6.1 RECURRENT BUDGET ______________________________________________________________23 6.1.1 Recurrent Budget____________________________________________________________________________________23 6.1.2 Recurrent Expenditure by Category _____________________________________________________________________25 6.1.3 Recurrent Revenue by Category ________________________________________________________________________25 6.1.4 Recurrent Expenditure by location ______________________________________________________________________26 6.2 DEVELOPMENT BUDGET ___________________________________________________________27 6.2.1 Aid Funded Project Expenditure by Ministry ______________________________________________________________27 6.2.2 Development Expenditure by Location ___________________________________________________________________29 6.2.3 Development Expenditure by Development Partners ________________________________________________________30 7. CONCLUSION_______________________________________________________________________36 8. ANNEX I: MACROECONOMIC AND SOCIAL OUTCOMES AND OUTLOOK______________38 8.1 REGIONAL HIGHLIGHT ____________________________________________________________38 8.2 DOMESTIC ECONOMY AND OUTLOOK FOR TONGA ______________________________________38 8.2.1 Fiscal outlook___________________________________________________________________________________42 8.2.1.1 FY 2020/21 Budget in the GFS Format _______________________________________________ 42 8.2.1.2 Debt Performances ________________________________________________________________ 50 8.2.2 Monetary Policy Outcomes_________________________________________________________________________54 8.2.3 Tonga Selected Indicators _________________________________________________________________________68 9. ANNEX II: BUDGET CONTRIBUTION TO THE GPA FY 2020/21 _________________________73 10. ANNEX III: DEVELOPMENT AID CLASSIFICATION BY LOCATION ____________________77 10.1 Aid Funded Project Expenditure by Development Aid Classification (DAC) ______________________________________77 10.2 Development Expenditure by Location ___________________________________________________________________78 11. ANNEX IV: TROPICAL CYCLONES GITA AND TINO RECOVERY REPORT _____________79 12. ANNEX V: ECONOMIC AND SOCIAL STIMULUS PACKAGE TO COMBAT COVID-19 ____80 13. ACRONYMS ________________________________________________________________________82 Ministry of Finance (MOF) 1 Government of Tonga Budget Statement for year ending 30th June 2021 2020/21 ‘God is my Refuge and my Fortress’ List of Tables: Table 1: Fiscal Anchors and Position.................................................................................................................. 7 Table 2: Government Financial Statistics (GFS) Summary Table (provisional) ............................................ 9 Table 3: Summary of Budget Estimates FY 2018/19 – 2019/20.....................................................................20 Table 4 : Summary of Government Budget by Priority Areas.......................................................................21 Table 5: Recurrent Budget ($m) ....................................................................................................................... 23 Table 6: Total Recurrent Budget by Location ($m) ........................................................................................ 26 Table 7: Total Development Budget by type ($m) ........................................................................................... 27 Table 8: Total Development Budget (Aid Funded Project Expenditure) by MDA ($m).............................. 27 Table 9: Total Development Budget (Expenditure) by Location ($m)........................................................... 29 Table 10: Total Development Budget (Expenditure) by Development Partners ($m)..................................31 Table 11: Real GDP (%)—growth and shares.................................................................................................38 Table 12: Macroeconomic Indicators ............................................................................................................... 41 Table 13: Net Present Value of Debt Ratio.......................................................................................................54 Table 14: Aid Funded Project (Expenditure by DAC)($m) by location ........................................................ 78 List of Figures: Figure 1: GDP growth and share by sector........................................................................................................6 Figure 2: Total Recurrent Budget (Expenditure, $m) by Category............................................................... 25 Figure 3: Total Recurrent Budget (Revenue, $m) by Category......................................................................25 Figure 4: Total Public Debt ($million) 2016/17– 2024/25e (including actual and projected)....................... 51 Figure 5: External Disbursed Outstanding Debt (DOD) by