Tonga should try to attract wealthy investors, the International Monetary Fund said in its latest report on the kingdom’s economy.
The IMF recommended a raft of polices to improve the country’s economy and to help it face what it said would be a spike in debt repayments from 2024.
The IMF said the kingdom was in “high debt distress.”
It recommended the government build up a budget surplus to allow a sufficient build-up of fiscal buffers for debt repayment.
It also needed to rationalise the taxation regime to allow for sufficient reserves
The IMF also recommended increasing the emergency fund to meet unexpected climate related shocks
Among its other recommendations were to introduce policies and schemes on land issues and investment policies to attract large and wealthy investors.
“The complexity and non-transparency and delays in the operation of the land market is critical to attracting of large investors and strategically expanding the production and economic base of Tonga,” the IMF said.
The financial institution said Tonga’s economic performance was gradually growing and could grow more strongly if it implemented its policies.
It said the kingdom’s economic growth was three percent in the 2019 financial year.
This was driven by consumer demand, overseas remittances and effective monetary policy, and credit growth.
However, it noted that economic growth was slower due to market losses after Cyclone Gita.
The IMF also noted low inflation, a fourth consecutive budget surplus and a stable financial sector.
The main points
- Tonga should try to attract t wealthy investors, the International Monetary Fund says in its lest report on the kingdom’s economy.
- The IMF recommended a raft of polices to improve the country’s economy and to help it face what it said would be a spike in debt repayments from 2024.
