GOVERNMENT has announced a budget deficit of about $60million from its total proposed Estimates of $589.6 million for the 2020/2021 financial year.

The $589.6 million budget consists of the $465.8million government budget support and donor cash and 123.78 million (59 percent) donor in-kind.

The Hon. Minister of Finance, Tevita Lavemaau made the announcement in Parliament while delivering the Budget Statement 2020/2021.

The theme for the 2020/21 budget is “God is our refuge and our fortress.” Hon. Lavemaau said it is a re-emphasis that despite the hardships and the challenges Tonga is facing, especially with the impacts of COVID 19 pandemic, our only hope, and protection is the Almighty God.

He said the 465.8 million recurrent budget comprised of 85.8 million grant from the development partners, 282 million from Government and 38.5 million is donor budget support. Other cash includes 20.5 million from government general reserve and 19 million is through funds available for a proposed concessional loan from the International Monetary Fund (IMF).

Hon. Lavemaau said the budget deficit means government budgets more spending beyond its means and revenue collection will fall short by approximately 60 million.

There are two recommendations for Government in dealing with the budget deficit in the next financial year. It should maintain its operation to the best extent with available resources.  The other measure is to continue its government operations, while at the same time, seek other means to finance the fiscal deficit. 

Hon. Lavemaau said a 20 million bond will be transferred from the government general reserve to fund its operation while 19 million through a concessional loan from IMF.

These are countermeasures government plans to undertake to address the budget deficit. The budget deficit is worsened due to the global impacts of COVID-19 which drastically affect Tonga.

Hon. Lavemaau said despite the challenges posed by the coronavirus pandemic, the Government will continue the effort to prudently manage, monitor and maintain its fiscal sustainability through revenue collection.

The development budget which comprised of 35 percent of the total Estimates is totalled at 209.5 million. Of that amount, 85.8 million is donor cash and 123.8 million in-kind. These are contributions from development partners.

Hon. Lavemaau told Parliament it is important to note the significant contribution from our development partners especially this difficult time to help Tonga with the impacts of COVID-19.

Meanwhile, the government top agenda for 2020-2023 includes health, illicit drugs and national, quality education, economic and social development, infrastructure with priority on road improvement. Energy, climate change and disaster risk reduction, public sector system reform (including E-Government) and social benefits for the elderlies and the vulnerabilities.

The Budget Statement 2020/21 pointed out, the COVID-19 pandemic is the Government’s top priority concern under Health. From March 20, Tonga was declared a State of Emergency and since then, Government has been undertaking a national effort to combat COVID-19 from entering Tonga.

At the same time, government has closed all its borders until June 12 to ensure Tonga remains a coronavirus free country.  

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