Tonga: 2011 Article IV Consultation: Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Alternate Executive Director for Tonga
IMF Staff Country Reports, May 19, 2011
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- Tonga: 2011 Article IV Consultation: Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Alternate Executive Director for Tonga
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Bibliographic details
- Published: May 19, 2011
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781455264438.002
Economic recovery and near-term drivers
- Tonga’s economy showed recovery from recent shocks on the back of stronger tourism activity and fiscal expansion.
- Generous grant inflows supported the recovery but did not eliminate vulnerability.
Debt sustainability and risk assessment
- According to World Bank-IMF debt sustainability analysis, Tonga remains at “high risk of debt distress”.
- Executive Directors encouraged authorities to set up a comprehensive debt-management strategy to limit the credit and currency risks.
Fiscal policy and consolidation
- Executive Directors stressed that fiscal consolidation is necessary to ensure fiscal sustainability.
- Fiscal expansion contributed to the near-term recovery but needs to be reconciled with medium-term debt sustainability concerns.
Structural reforms and private sector
- Directors welcomed the government’s policy to pursue structural reforms to promote private sector activity and restore fiscal sustainability.
- Emphasis on restoring fiscal sustainability while promoting private-sector-led growth.