Tonga's acting Prime Minister says the government's made a decision not to borrow any more money from China until 2013.
In line with advice from the International Monetary Fund to avoid new borrowing and cut spending ,Tonga's considering downsizing its diplomatic presence in Australasia and opening a new embassy in Bangkok.
The budget that was passed at the end of last month fell short by almost 20 million US dollars but Samiu Vaipulu says the country's debts can still be paid.
He says there's no decision on converting a 118 million pa'anga loan from China to a grant.
"What we are doing with the Chinese, we borrowed money from them - well, this was in the former government - and with this government we are not borrowing until 2013. And at the moment we are still able to pay our loans. We are still doing fine with that."
Samiu Vaipulu says he can't say what China might expect in return for turning its loan into a grant.
However the opposition MP Akilisi Pohiva says the result will amount to Chinese ownership of Tonga.