Tonga: 2020 Article IV Consultation and Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Tonga
IMF Staff Country Reports, February 1, 2021
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- Tonga: 2020 Article IV Consultation and Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Tonga
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Bibliographic details
- Published: February 1, 2021
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513568041.002
Overview
- Tonga’s recovery following the devastation of the 2018 Cyclone Gita has been derailed by a double blow from the pandemic and Cyclone Harold.
- Early actions to close external borders have kept Tonga COVID-19-free.
Macroeconomic impact and projections
- FY2020 GDP growth is estimated to fall to -2½ percent due to:
- domestic containment measures,
- a sudden stop in tourism,
- investment delays.
- The full brunt of the pandemic will be felt in FY2021 (beginning July) during peak tourism season, when a deeper contraction is expected.
- Beyond FY2021, the recovery is expected to resume in line with the global recovery, but the magnitude and trajectory is uncertain.
Policy response and near-term implications
- Prompt economic support and early border closures helped avoid a worse outcome.
- Key near-term priorities implicit in the assessment:
- Maintain public health measures that have kept the country COVID-19-free.
- Continue targeted economic support to cushion the pandemic’s immediate impact on households and businesses, especially tourism-related sectors.
- Monitor investment delays and support measures to restore investor confidence when external conditions permit.
Risks and uncertainties
- The depth of the FY2021 contraction is uncertain and tied to:
- the timing and scale of global tourism recovery,
- the course of the pandemic globally,
- the broader global economic recovery, which will influence Tonga’s own path.
- Recovery trajectory beyond FY2021 remains uncertain.
International Monetary Fund. Tonga: 2020 Article IV Consultation and Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Tonga (Country Report No. 2021/026).
Content in this bundle
- 1tonea2021001