{
  "title": "Tonga: Staff Report for the 2014 Article IV Consultation",
  "publication": "IMF Staff Country Reports, August 6, 2014",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2016/12/31/tonga-staff-report-for-the-2014-article-iv-consultation-41816",
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  "summary": "KEY ISSUES Context: Tonga’s economy is rebounding, partially owing to a recovery in agricultural exports. The outlook for tourism is also improving. The reconstruction from a recent cyclone is expected to lead to both a temporary boost to growth and additional financing needs.",
  "publishDate": "2014-08-06",
  "series": "IMF Staff Country Reports",
  "sections": [
    {
      "heading": "Key issues — Context and outlook",
      "content": "- Tonga’s economy is rebounding, partially owing to a recovery in agricultural exports.\n- The outlook for tourism is improving.\n- Reconstruction from a recent cyclone is expected to lead to both a temporary boost to growth and additional financing needs.\n- Risks to the inflation outlook and the external position are low."
    },
    {
      "heading": "Fiscal policy — findings and recommendations",
      "content": "- Finding: The projected fiscal cost relating to the cyclone will be largely met by confirmed funding mainly from donor agencies.\n- Near-term recommendation: Authorities should focus on reconstruction activities.\n- Medium-term recommendation: Adopt a fiscal strategy to gradually stabilize and then reduce the debt-to-GDP ratio to improve Tonga’s moderate risk of debt distress.\n- Implementation risk: Careful execution of investments related to the 2019 South Pacific Games is required to avoid worsening the debt outlook."
    },
    {
      "heading": "Monetary policy — findings and recommendations",
      "content": "- Finding: The deleveraging cycle of the Tongan banks appears to be ending.\n- Recommendation: National Reserve Bank of Tonga should prepare to gradually withdraw liquidity and tighten monetary conditions once current signs of a recovery of credit growth are confirmed.\n- Authorities’ plan: Lower the cost of credit through supportive credit policies, including by commercializing the Tonga Development Bank.\n- Safeguards required: Successful implementation requires sound safeguards, including a robust governance structure and firm risk management and accountability frameworks."
    },
    {
      "heading": "Structural policy — findings and recommendations",
      "content": "- Finding: Structural reforms to facilitate the functioning of credit markets need to be implemented with renewed vigor.\n- Tax policy recommendation: Authorities’ intention to gradually phase out existing ad hoc tax incentives is well placed.\n- FDI promotion recommendation: Focus promotion of foreign direct investment on business-enabling structural reforms; minimize and narrowly target the use of tax incentives."
    },
    {
      "heading": "Subjects, keywords, and metadata (exact figures preserved)",
      "content": "- Subject: Banking, Central banks, External debt, International reserves, Public and publicly-guaranteed external debt, Public debt, Public financial management (PFM)\n- Keywords: Asia and Pacific, Australia and New Zealand, CR, Global, government regulation, headline consumer price index, headline inflation, inflation outlook, International reserves, ISCR, Pacific Islands, Public and publicly-guaranteed external debt, reference range, Tonga, Tongan authorities\n- Publication date: August 6, 2014\n- Pages: 67\n- Volume: 2014\n- Issue: 240\n- Series: Country Report No. 2014/240\n- DOI: https://doi.org/10.5089/9781498388870.002\n- Stock No: 1TONEA2014001\n- ISBN: 9781498388870\n- ISSN: 1934-7685\n\nSource: Tonga: Staff Report for the 2014 Article IV Consultation (IMF Staff Country Reports 2014/240, August 6, 2014).\n\n---\n\n Content in this bundle\n\n- cr14240\n  - cr14240 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - cr14240 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/cr/issues/2016/12/31/tonga-staff-report-for-the-2014-article-iv-consultation-41816"
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    "Published: August 6, 2014",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781498388870.002",
    "Tonga’s economy is rebounding, partially owing to a recovery in agricultural exports.",
    "The outlook for tourism is improving.",
    "Reconstruction from a recent cyclone is expected to lead to both a temporary boost to growth and additional financing needs.",
    "Risks to the inflation outlook and the external position are low.",
    "Finding: The projected fiscal cost relating to the cyclone will be largely met by confirmed funding mainly from donor agencies.",
    "Near-term recommendation: Authorities should focus on reconstruction activities.",
    "Medium-term recommendation: Adopt a fiscal strategy to gradually stabilize and then reduce the debt-to-GDP ratio to improve Tonga’s moderate risk of debt distress.",
    "Implementation risk: Careful execution of investments related to the 2019 South Pacific Games is required to avoid worsening the debt outlook.",
    "Finding: The deleveraging cycle of the Tongan banks appears to be ending.",
    "Recommendation: National Reserve Bank of Tonga should prepare to gradually withdraw liquidity and tighten monetary conditions once current signs of a recovery of credit growth are confirmed.",
    "Authorities’ plan: Lower the cost of credit through supportive credit policies, including by commercializing the Tonga Development Bank.",
    "Safeguards required: Successful implementation requires sound safeguards, including a robust governance structure and firm risk management and accountability frameworks.",
    "Finding: Structural reforms to facilitate the functioning of credit markets need to be implemented with renewed vigor.",
    "Tax policy recommendation: Authorities’ intention to gradually phase out existing ad hoc tax incentives is well placed.",
    "FDI promotion recommendation: Focus promotion of foreign direct investment on business-enabling structural reforms; minimize and narrowly target the use of tax incentives.",
    "Subject: Banking, Central banks, External debt, International reserves, Public and publicly-guaranteed external debt, Public debt, Public financial management (PFM)",
    "Keywords: Asia and Pacific, Australia and New Zealand, CR, Global, government regulation, headline consumer price index, headline inflation, inflation outlook, International reserves, ISCR, Pacific Islands, Public and publicly-guaranteed external debt, reference range, Tonga, Tongan authorities",
    "Publication date: August 6, 2014",
    "Pages: 67",
    "Volume: 2014",
    "Issue: 240",
    "Series: Country Report No. 2014/240",
    "DOI: https://doi.org/10.5089/9781498388870.002",
    "Stock No: 1TONEA2014001",
    "ISBN: 9781498388870",
    "ISSN: 1934-7685",
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