Tonga: 2006 Article IV Consultation: Staff Report; and Public Information Notice on the Executive Board Discussion
IMF Staff Country Reports, June 28, 2006
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- Tonga: 2006 Article IV Consultation: Staff Report; and Public Information Notice on the Executive Board Discussion
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Bibliographic details
- Published: June 28, 2006
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451837469.002
Key findings
- Tonga’s economy has become increasingly vulnerable.
- Fiscal discipline has weakened, undermining macroeconomic stability and external viability.
- Medium-term prospects have deteriorated.
- There are other serious downside risks to the fiscal outlook.
Risks and outlook
- Further monetary tightening in response to the wage settlement is required.
- Full flexibility of the exchange rate system is required.
- A larger and more dynamic private sector offering alternative employment opportunities would facilitate the downsizing of the public sector.
Policy recommendations
- Tighten monetary policy further to address pressures related to the wage settlement.
- Maintain full flexibility of the exchange rate system.
- Promote development of a larger and more dynamic private sector to provide alternative employment and allow public sector downsizing.
- Improve the reliability, coverage, and timeliness of statistics.
Subject areas and keywords (as provided)
- Subject: Capital spending, Civil service, Expenditure, Imports, International trade, Labor, Wage adjustments, Wage bargaining
- Keywords: asset sale, Australia and New Zealand, capital account surplus, Capital spending, Civil service, CR, credit development, executive board assessment, executive board discussion, financing, government operation, Imports, ISCR, Pacific Islands, private sector, private sector credit, severance payment, Tongan authorities, Tongan political system, Wage adjustments, Wage Bargaining
International Monetary Fund. "Tonga: 2006 Article IV Consultation: Staff Report; and Public Information Notice on the Executive Board Discussion"