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Strengthening macro-economic capacity in the Office of the Ministry of Finance and National Planning

Strengthening macro-economic capacity in the Office of the Ministry of Finance and National Planning

The Commonwealth Secretariat is assisting the Government of Kingdom of Tonga through strengthening the knowledge base on macro-economic policy planning.

Country: Tonga
Host: Ministry of Finance and National Planning
Start Date: 16 May 2016
End Date: 16 May 2018
Policy Area: Economic Policy
Policy Expert: Denny Lewis-Bynoe 
Project Manager: Pauline Campbell

Background

Tonga has a small, open, South Pacific island economy. It has a narrow export base in agricultural goods − squash, vanilla beans, and yams are the main crops. Agricultural exports, including fish, make up two-thirds of total exports. The country continues to import a high proportion of its food, mainly from New Zealand. Tonga remains dependent on external aid and remittances from Tongan communities overseas to offset its trade deficit. Tourism is the second-largest source of hard currency earnings following remittances, measuring some 39,000 visitors in 2006.

The government is emphasizing the development of the private sector, especially the encouragement of investment, and is committing increased funds for health and education. Tonga has a reasonably sound basic infrastructure and well developed social services. High unemployment among the young, moderate inflation, pressures for improving public service, and rising civil service expenditures are major issues facing the government.

Real GDP growth is expected to strengthen to 2.4 percent in 2014/15 and continue to grow as forecasted for the coming years, averaging at 3.1 percent over the period 2014/15-2017/18. This is supported by banks again increasing lending to private sectors. Tonga will continue to access international financial assistance, with external debt levels continuing to mount but on a manageable level. The government has launched a fund to provide low-interest loans to the private sector in a bid to improve exporters' access to credit. 

The Government recognizes that to achieve economic prosperity, Tonga will need to significantly improve its policy making ability particularly within the MOFNP. To achieve this task, the Government of Kingdom of Tonga has requested Technical Assistance under the auspices of the Commonwealth Fund for Technical Cooperation (CFTC) to place an experienced Economic Adviser in the Ministry of Finance and National Planning (MOFNP). 

Goal

The project aims to secure more inclusive economic growth and sustainable development for Tonga. The Government aims to strengthen its knowledge base on economic policy making within the MOFNP leading to a more progressive Tonga enabling a higher quality of life for all – the theme for the TSDF ll. 

Impact

This project will eventually strengthen the knowledge base on macro-economic policy making within the Prime Minister’s Office and Cabinet Secretariat leading to a more inclusive growth and sustainable development in Tonga. Additionally, this project will up-skill relevant technical staff within the Ministry of finance and national planning. This will enable a more effective “centre of government” as the nucleus for economic policy formulation, coordination and implementation.

The beneficiaries of this project will include the Prime Minister of Tonga, members of Cabinet and technical staff within the Ministry of Finance and National Planning.

Expected Deliverables/Outputs

The technical assistance expert will:

  • Support the Minister of Finance and National Planning Office in its engagement with relevant stakeholders toward the development of and coordination of national strategic policy development and implementation. 
  • Review and assess the current and emerging economic policies and Tonga’s economic prospects in the context of the global environment and fragilities within the region.