12 Jun 2013

Tonga budget to be propped up by aid

1:39 pm on 12 June 2013

The Tongan government has announced a budget that is strongly dependent on foreign aid support.

The government is planning to spend five percent more in the coming year compared with last year - about 202 million US dollars.

Don Wiseman has more:

"Matangi Tonga reports that 55 percent of the Budget is set to come from aid donors - particularly Australia, New Zealand, the European Union and the World Bank. But the Finance Minister Lisiate 'Akolo admits that both the World Bank and the EU withheld commitments last year after Tonga failed to meet certain conditions. The budget includes more money for health, policing and road building. Mr Akolo says Tonga this year begins repaying the principal on a loan from China for the rebuilding of Nuku'alofa. He says there's little growth in the economy while the 50 percent fall in remittances has been having a significant effect. Mr Akolo says in the past there has been too much talk and not enough action on reviving the economy and he wants to do something about that. He says they are setting aside funds to encourage exports, putting more money into the Tourism Authority, providing initial funding for Real Tonga Airline, and setting up a national growth committee to stimulate the economy. The government will also launch a royal commission to find out why returns from government agencies have plummetted."