Tonga: 2025 Article IV Consultation-Press Release; and Staff Report

IMF Staff Country Reports, November 10, 2025

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Tonga’s economy is expanding steadily.
Expansion is driven by:
- stronger-than-expected grant inflows,
- elevated remittances,
- a rebound in tourism,
- fiscal support for the reconstruction.

Headline inflation has declined below the reference rate, driven by lower food and energy prices.
Core inflation has picked up, reflecting stronger domestic demand.

Risks in the banking sector remain contained but have increased and require continued vigilance.

Tonga faces significant structural challenges including:
- geographic remoteness,
- a small and dispersed population,
- high vulnerability to natural disasters.
Persistent vulnerability discourages investment and incentivizes emigration, weighing on long-term growth prospects.
Addressing these challenges requires policies and reforms to enhance resilience and growth potential, particularly in a global environment marred by heightened policy uncertainty.

Subject: Debt sustainability, Debt sustainability analysis, External debt, Public debt
Keywords: currency of Tonga, Debt sustainability, Debt sustainability analysis, exchange rate arrangement, fund holding, Global, Imf executive board, intervention currency, National reserve bank, Pacific Islands, safeguards assessment of the Nrbt
Pages: 92
Volume: 2025
DOI: https://doi.org/10.5089/9798229030694.002
Issue: 293
Series: Country Report No. 2025/293
Stock No: 1TONEA2025001
ISBN: 9798229030694
ISSN: 1934-7685

Tonga: 2025 Article IV Consultation-Press Release; and Staff Report — IMF Staff Country Reports (November 10, 2025).

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