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Country Report Tonga Product Image

Country Report Tonga

  • Published: July 2014
  • Region: Tonga
  • 17 Pages
  • The Economist Intelligence Unit

In late June the Tonga parliament passed the budget for fiscal year 2014/15 (July-June). The budget projects expenditure of T$450.7m (US$255m), a 53.5% increase over the estimated expenditure in 2012/13 and equivalent to around 53% of GDP.

The budget is the first for the finance minister, 'Aisake Eke, appointed to the portfolio in January 2014 after the prime minister, Lord Tu'ivakano, sacked Lisiate Akolo, the former minister, over Mr Akolo's misgivings concerning parliament's voting of a 5% cost-of-living pay rise to government employees. Mr Eke's budget is highly expansionary. Apart from an 11% increase in the government's salary bill to T$101.9m, he has proposed T$156m in capital expenditure, over five times what was spent in 2013/14. This spending is for infrastructure projects including reconstruction in the Ha'apai islands owing to the damage from Cyclone Ian, expansion of the Fua'amotu Airport and the extension of fibre optic links to the outer islands.

The 2014/15 budget reflects the country's dependence on foreign aid, which leaves the country in a precarious fiscal position, as its donors may not deliver what they have pledged. The government anticipates revenue READ MORE >

Country Report Tonga

2014/15 budget highlights continued donor dependence
Event
Analysis
Impact on the forecast

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