IMF Staff Country Reports

Tonga: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Tonga

November 25, 2024

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International Monetary Fund. Asia and Pacific Dept "Tonga: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Tonga", IMF Staff Country Reports 2024, 326 (2024), accessed November 8, 2025, https://doi.org/10.5089/9798400293801.002

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Summary

The 2024 Article IV Consultation discusses that Tonga’s economic activity has strengthened, bolstered by consistent remittance flows, continued tourism recovery, and robust construction activities. Inflationary pressures have substantially eased. After peaking at 14.1 percent in September 2022, headline inflation has since been normalizing. The near-term baseline economic outlook remains favorable appropriately supported by expansionary fiscal and monetary policy. Real gross domestic product (GDP) growth is projected to accelerate to 2.4 percent in FY2025, mostly led by continued strength in domestic demand including large public investment projects and a rebound in agricultural output as the effects of El Nino dissipate. The medium-term growth prospects remain uneven, however. Tonga’s long-term growth is projected at 1.2 percent, reflecting its exposure to increasingly frequent natural disasters, persistent loss of workers to emigration, and limited economies of scale due to geographical barriers. Structural reforms with a focus on bolstering disaster resilience, advancing digital transformation, and strengthening governance frameworks to foster a conducive business environment are essential to meet Tonga’s developments goals.

Subject: Debt sustainability analysis, Environment, External debt, Natural disasters, Public debt

Keywords: Australia and New Zealand, Currency basket, Debt sustainability analysis, Global, Intervention currency, Natural disasters, Pacific Islands, Priority safeguards assessment recommendation, Reference rate, Tonga authorities

Publication Details

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