Tonga: 2025 Article IV Consultation-Press Release; and Staff Report

International Monetary Fund

No 2025/293, IMF Staff Country Reports from International Monetary Fund

Abstract: Tonga’s economy is expanding steadily, driven by stronger-than-expected grant inflows, elevated remittances, a rebound in tourism, and fiscal support for the reconstruction. Headline inflation has declined below the reference rate, driven by lower food and energy prices, but core inflation has picked up, reflecting stronger domestic demand. Risks in the banking sector remain contained but have increased and require continued vigilance. Meanwhile, Tonga continues to face significant structural challenges including geographic remoteness, a small and dispersed population, and high vulnerability to natural disasters. This persistent vulnerability discourages investment and incentivizes emigration, weighing on long-term growth prospects and requiring policies and reforms to enhance resilience and growth potential, particularly in a global environment marred by heightened policy uncertainty.

Keywords: Imf executive board; intervention currency; fund holding; National reserve bank; safeguards assessment of the Nrbt; exchange rate arrangement; currency of Tonga; Debt sustainability analysis; Debt sustainability; Global; Pacific Islands (search for similar items in EconPapers)
Pages: 92
Date: 2025-11-10
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