Tonga 

Tonga country policy

Policy established 11 July 2007

• Off cover

Country class: 7

Tonga country facts

Atradius DSB Economic Research
Country Report last updated :  11 May 2007
Country :  TONGA  

Political Situation
Unstable

Head of state
King George (Siaosi) Tupou V (since September 2006); PM Feleti Seveli (February 2006)

Form of government
Despite being a constitutional monarchy, Tonga is ruled by the royal family and some powerful nobles.

Internal Economic Situation
Contraction Due To Riots

General situation
The economy consists largely of subsistence agriculture (main crops: squash ,coconuts, bananas, vanilla). >70% of land is owned by the 33 noble families and this land is often badly managed. Tonga’s economy is growing at a slow pace.
Growth was 1.3% in 2006. For this year a slight contraction is forecasted. The economy remains dependant on foreign aid and remittances from overseas workers.    

External Economic Situation
Dependant On Aid And Remittances

Main sources of foreign exchange
Tourism, fish, squash, vanilla, remittances

Main foreign markets
Japan (33%), US (26%), New Zealand (11%)

Main expenses of foreign exchange
Food (28%), fuels (28%), capital goods (20%)

Balance of payments 
Despite huge inflows of remittances (40% of GDP) the current account shows rather large deficits. Capital account is positive due to inflows of foreign aid. Main donors: Australia, Japan, NZ.