Budget Statements for year ending 30th June 2012 Budget Statement, 2011/2012 1 Budget Statements for year ending 30th June 12 2 Budget Statements for year ending 30th June 2012 Table of Contents 1 THE NATIONAL DEVELOPMENT VISION .................................................................................................... 6 1.1 OUTCOME OBJECTIVES ................................................................................................................................... 6 1.2 ENABLING THEMES ........................................................................................................................................ 6 2 BUDGET AT A GLANCE ............................................................................................................................. 7 2.1 BUDGET OBJECTIVES AND FISCAL APPROACH ...................................................................................................... 8 2.2 GOVERNMENT ACTIVITIES BY OUTCOME OBJECTIVES ........................................................................................... 9 3 GLOBAL AND REGIONAL DEVELOPMENTS .............................................................................................. 15 3.1 GLOBAL DEVELOPMENTS .............................................................................................................................. 15 3.2 REGIONAL DEVELOPMENTS ........................................................................................................................... 15 4 TONGA’S RECENT ECONOMIC AND SOCIAL PERFORMANCE .................................................................... 17 4.1 PROGRESS WITH MILLENNIUM DEVELOPMENT GOALS (MDGS) ........................................................................... 17 4.2 ECONOMIC PROGRESS ................................................................................................................................. 19 4.2.1 Historical and Targeted GDP Growth ................................................................................................ 19 4.2.2 GDP Sectorial Performance ................................................................................................................ 21 4.2.3 Public Enterprise Performance ........................................................................................................... 28 4.2.4 Fiscal Performance ........................................................................................................................... 30 4.2.5 Monetary Performance...................................................................................................................... 30 4.2.6 External Performance ........................................................................................................................ 35 4.3 SOCIAL AND COMMUNITY PROGRESS ........................................................................................................... 39 4.3.1 Education Performance ..................................................................................................................... 39 4.3.2 Health Performance ........................................................................................................................... 40 4.3.3 Charitable and Sporting Organizations ............................................................................................. 43 4.3.4 Community Development Performance ............................................................................................. 43 4.3.5 Major Activities/Programs by Island in 2010/11 ............................................................................... 45 5 NATIONAL REFORM PROGRAM AND BUDGET FRAMEWORK .................................................................. 49 5.1 INTRODUCTION ........................................................................................................................................... 49 5.2 LINKING STRATEGIES AND REFORMS ............................................................................................................... 50 5.3 MEDIUM TERM FISCAL POLICY FRAMEWORK .................................................................................................... 50 5.4 KEY REFORM OBJECTIVES ............................................................................................................................. 51 5.4.1 Improved Public Financial Management ........................................................................................... 51 5.4.2 Confirmed core functions of Government and improved public service structure ............................. 52 5.4.3 Improved access to cost effective energy .......................................................................................... 53 5.4.4 Improved enabling environment for private sector development ..................................................... 53 5.4.5 Viable and inclusive communities with access to improved services (health, education) ................. 53 5.4.6 Potential Risks .................................................................................................................................... 54 5.5 REFORM MATRIX WITH DEVELOPMENT PARTNERS FOR BUDGET SUPPORT ............................................................. 54 6 2011/12 BUDGET................................................................................................................................... 55 6.1 OVERVIEW ................................................................................................................................................. 55 6.2 REVENUE AND GRANTS ................................................................................................................................ 55 6.2.1 Total Revenue and Grants for 2010/11 ............................................................................................. 56 6.3 EXPENDITURE ............................................................................................................................................. 62 6.3.1 Current Expenditure ........................................................................................................................... 63 6.3.2 Capital Expenditure ............................................................................................................................ 66 6.4 FINANCING ................................................................................................................................................ 66 6.5 PUBLIC DEBT .............................................................................................................................................. 67 6.5.1 External Creditors and Currency of External Debt ............................................................................. 67 6.5.2 Outstanding Domestic Loans and Loan Guarantees .......................................................................... 67 6.5.3 Total Debt Service ‐ external and domestic (TDS) .............................................................................. 68 6.5.4 Debt Sustainability ............................................................................................................................. 69 7 CONCLUSION ........................................................................................................................................ 70 3 Budget Statements for year ending 30th June 12 List of Tables TABLE 1: TOTAL CASH BUDGETS FOR EACH OUTCOME OBJECTIVES) ................................................................... 7 TABLE 2: KEY ECONOMIC AND FISCAL INDICATORS: ............................................................................................ 7 TABLE 3: STATUS AT A GLANCE: PROGRESS AND ACHIEVABILITY OF THE MDG FRAMEWORK IN TONGA .. 17 TABLE 4: GDP IN CURRENT PRICES (T$MILLION) ............................................................................................... 20 TABLE 5: ECONOMIC GROWTH AND FORECAST BY SECTOR - REAL TERMS (%) ................................................ 21 TABLE 6: SECTOR CONTRIBUTIONS TO GDP (%) ................................................................................................. 21 TABLE 7: PUBLIC ENTERPRISE RETURN ON ASSETS ............................................................................................. 28 TABLE 8: GRANT ALLOCATION TO TONGATAPU BY PROJECT TYPES FOR 2007/08 - 20010/11 ........................... 45 TABLE 9: GRANT ALLOCATION TO HA’APAI BY PROJECT TYPES: 2007/08 – 2010/11 ......................................... 46 TABLE 10: GRANT ALLOCATION TO VAVA’U BY PROJECT TYPES: 2007/08 TO 2010/11 .................................... 46 TABLE 11: GRANT ALLOCATION TO ‘EUA BY PROJECT TYPES: 2010/11 TO 2011/12 .......................................... 47 TABLE 12: GRANT ALLOCATION TO NIUA BY PROJECT TYPES: 2010/11 TO 2011/12 ........................................ 47 TABLE 13: OVERALL FISCAL BALANCE ($MILLION) ............................................................................................. 55 TABLE 14:TOTAL REVENUE AND GRANTS ($MILLION) ......................................................................................... 56 TABLE 15: TAXES ON INCOME & PROFITS ($MILLION) ......................................................................................... 57 TABLE 16: CONSUMPTION TAX ($MILLION) ........................................................................................................... 58 TABLE 17: EXCISE TAXES ($MILLION) ..................................................................................................................