{
  "title": "IMF Executive Board Approves a US$9.03 Million Disbursement to Tonga",
  "publication": "IMF News, July 18, 2022",
  "sourceUrl": "https://www.imf.org/en/news/articles/2022/07/18/pr22264-imf-executive-board-approves-a-us9-03-million-disbursement-to-tonga",
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  "summary": "IMF Executive Board Approves a US$9.03 Million Disbursement to Tonga",
  "publishDate": "2022-07-18",
  "sections": [
    {
      "heading": "Event and context",
      "content": "- Date of press release: July 18, 2022\n- Press Release No. 22/264\n- Press officer: Pemba Sherpa\n- Phone: +1 202 623-7100\n- Email: MEDIA@IMF.org\n- Situation:\n  - Tonga suffered a double blow from the Hunga Tonga–Hunga Haʻapai (HTHH) volcanic eruption and the first local outbreak of COVID-19 at the start of 2022, which derailed Tonga’s recovery from Tropical Cyclone Harold and closure of international borders in 2020.\n  - The shocks created urgent balance of payments needs for reconstruction and social protection."
    },
    {
      "heading": "IMF decision and financing details",
      "content": "- The IMF Executive Board approved the disbursement of SDR 6.9 million (about US$9.03 million or 50 percent of quota) under the Rapid Credit Facility (RCF) to Tonga.\n- Purpose of financing:\n  - To help meet Tonga’s urgent balance of payments needs for reconstruction and social protection following the HTHH volcanic eruption and the COVID-19 outbreak.\n  - To catalyze critical donor support for recovery and reconstruction."
    },
    {
      "heading": "Macroeconomic outlook and risks (from IMF Statement by Mr. Bo Li)",
      "content": "- Near-term outlook:\n  - The current account balance is expected to deteriorate substantially in FY2023 (July 2022‒June 2023), driven by increased imports of food and reconstruction-related materials, leading to a large external financing gap.\n- Policy buffers and stability:\n  - Macroeconomic and financial stability has been maintained thanks to policy buffers accumulated through prudent macroeconomic management in the run up to the global pandemic.\n  - Authorities remain vigilant given risks to inflation and credit quality in the banking sector and stand ready to take necessary policy actions to preserve stability.\n  - The authorities are committed to developing a macroprudential policy framework and enhancing the AML/CFT framework."
    },
    {
      "heading": "Short-term policy focus and international support",
      "content": "- Immediate priorities:\n  - Supporting recovery and reconstruction.\n  - Strengthening social protection for the poor.\n- Role of international community:\n  - Financial assistance from the international community is expected to support short-term recovery and reconstruction.\n  - Continued assistance from development partners will be critical to meet Tonga’s development and climate resilience goals.\n  - Continued support through grant financing and debt relief would be essential over the medium term."
    },
    {
      "heading": "Medium-term policy recommendations and structural reforms",
      "content": "- Fiscal policy:\n  - Once the recovery becomes entrenched, a comprehensive fiscal adjustment will be important to reduce the risk of debt distress while achieving climate and development goals.\n  - Continued efforts needed to broaden the tax base, enhance spending efficiency, and strengthen transparency and accountability in government operations, with capacity development support from the Fund.\n- Structural reforms:\n  - Promote private sector development.\n  - Reinforce climate resilience to help boost Tonga’s long-term growth potential."
    },
    {
      "heading": "Rapid Credit Facility (RCF) terms (as described in the release)",
      "content": "- The RCF provides rapid financial support in a single, up-front payout for low-income countries facing urgent financing needs.\n- Financial assistance under the RCF is provided as an outright disbursement to Poverty Reduction and Growth Trust (PRGT)-eligible members that face an urgent balance of payments need, and where a full-fledged economic program is either not necessary or not feasible due to the urgency of the need.\n- Financing characteristics for the RCF:\n  - Zero interest rate.\n  - Grace period of 5½ years.\n  - Final maturity of 10 years.\n\nIMF press release: IMF Executive Board Approves a US$9.03 Million Disbursement to Tonga (Press Release No. 22/264), July 18, 2022.\n\n---\n\n\n References\n\n- Tonga and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2022/07/18/pr22264-imf-executive-board-approves-a-us9-03-million-disbursement-to-tonga"
    }
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    "Published: July 18, 2022",
    "Date of press release: July 18, 2022",
    "Press Release No. 22/264",
    "Press officer: Pemba Sherpa",
    "Phone: +1 202 623-7100",
    "Email: MEDIA@IMF.org",
    "Situation:",
    "The IMF Executive Board approved the disbursement of SDR 6.9 million (about US$9.03 million or 50 percent of quota) under the Rapid Credit Facility (RCF) to Tonga.",
    "Purpose of financing:",
    "Near-term outlook:",
    "Policy buffers and stability:",
    "Immediate priorities:",
    "Role of international community:",
    "Fiscal policy:",
    "Structural reforms:",
    "The RCF provides rapid financial support in a single, up-front payout for low-income countries facing urgent financing needs.",
    "Financial assistance under the RCF is provided as an outright disbursement to Poverty Reduction and Growth Trust (PRGT)-eligible members that face an urgent balance of payments need, and where a full-fledged economic program is either not necessary or not feasible due to the urgency of the need.",
    "Financing characteristics for the RCF:",
    "[Tonga and the IMF](http://www.imf.org/external/country/TON/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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