Unprecedented Debate in Tonga Parliament over 2023-2024 Budget and Foreign Aid Reliance.
On June 20th, 2023, the Tonga Parliament witnessed a fiery discussion following the presentation of the 2023-2024 budget by the Minister of Finance, Hon. Tiofilusi Tiueti, earlier on June 14th. The budget, titled “Partnership for greater resilience and sustainability to restore inclusive growth,” was not received unanimously and sparked sharp exchanges among the parliament members, underlining the immense fiscal challenges facing the Kingdom.
The 2023-2024 budget totals a massive TOP$784.2 million (Tongan Pa’anga), indicating a deficit of over $27 million. It earmarks $419.5 million or 53.5% for government operations for the year and $364.7 million or 46.5% for development expenses, to be funded by donor partners. These figures highlight Tonga’s dependence on foreign aid, reflecting the country’s vulnerability to external shocks and underscoring the need for self-reliant economic measures.
Notably, the budget contains a worrying sign about Tonga’s financial state: of the total budget, $515.8 million or 65.8% is allocated as cash, while 34.2% or $268.4 million is marked as ‘donor in-kind.’ This ratio demonstrates the island nation’s considerable reliance on international donor assistance, hinting at possible long-term sustainability issues.
One of the most heated topics in the budget was the significant allocation for China’s loan repayment. The budget includes a hefty repayment totalling $67.1 million for 2024, an increase of $23.5 million from $43.6 million in the current financial year. This loan from China originated after the destructive November 2006 riot when the Tongan government borrowed TOP$119 million to rebuild the capital city, Nuku’alofa, in 2007. The increasing burden of debt repayment has stirred concerns about the country’s fiscal health and sovereignty.
The allocation of funds in the budget estimates for 2023-2024 further fuelled the debates. The Ministry of Infrastructure and the Ministry of Finance and National Planning claimed the largest share with 18%, followed closely by the Ministry of Education and Training at 17%. The Ministry of Health and MEIDECC (the Ministry of Meteorology, Energy, Information, Disaster Management, Environment, Climate Change, and Communications) received 9%.
The focus on infrastructure, finance, and national planning is understandable given Tonga’s developmental needs. However, critics argued for greater investment in health and education, areas crucial for the country’s long-term growth and sustainability. They believe that such sectors could create a more educated and healthier workforce, thereby promoting self-reliance and reducing dependence on donor aid.
Overall, the 2023-2024 budget has provoked vigorous debate in the Tonga Parliament. The arguments revolved around the allocation of funds, the country’s heavy reliance on foreign aid, and the growing debt owed to China. These concerns reflect the larger issues confronting the nation, such as economic resilience, sustainable development, and fiscal independence. The discussion also highlights the urgent need for robust economic strategies that can enhance self-reliance and steer Tonga towards a more secure and sustainable future.
