## 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_

## Source details

**Canonical URL:** [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](https://www.imf.org/en/publications/cr/issues/2021/01/28/tonga-2020-article-iv-consultation-and-request-for-disbursement-under-the-rapid-credit-50048)

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## Bibliographic details
- Published: February 1, 2021
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513568041.002

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### 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).*

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_Source: https://www.imf.org/en/publications/cr/issues/2021/01/28/tonga-2020-article-iv-consultation-and-request-for-disbursement-under-the-rapid-credit-50048_