Nation not too badly hit by crisis: Sevele

Duncan Wilson




Tonga’s Prime Minister Feleti Sevele says “substantial” reconstruction of Nuku’alofa should begin in July, now that the country has finally secured donor funds.
“It’s about to begin in earnest with two sites and I would say that within two to three months time, there will be a flurry of activities there.
“Alongside the actual reconstruction of the buildings that were destroyed, there are also civil works to be done, and other infrastructure work funded by the Asian Development Bank.
“The construction is largely funded by a soft loan from China, plus grants from New Zealand and Australia. That is about to really get off the ground.”
Sevele said the global economic recession has probably constrained donor funding. Tonga could always do with more funds, but will “make do with what we have”.
Sevele said the recession has hit remittances—a major revenue source worth about US$96 million each year to the kingdom. Transfers are currently down by 10 percent.
But the Prime Minister nevertheless maintains the island nation “has not been too badly hit”.
“There is no doubt that what has happened outside of Tonga, particularly in the United States, Australia and New Zealand, in terms of increases in unemployment and economic contraction, will certainly affect us. A decline in remittances will have a flow-on effect on the government revenue and to the general economy.
“But fortunately to-date, we have yet to see any laying off of people or unemployment, certainly within government. It may happen in some businesses but to date I have not seen any incidences of that. While things have not been great, things are not terribly bad.”
Sevele said the recession underlined the importance of Tonga’s cautious appraisal of the region’s liberalisation under the Pacific Agreement on Closer Economic Relations (PACER).
“Our reservations are the implications of PACER in terms of government revenue.
The concern is you open up one free trade area, inevitably government revenue from duties, excise taxes will be affected and revenue from duties and taxes on imports are government’s main source.”
However, Sevele was encouraged by the assurances of New Zealand’s Minister of Foreign Affairs Murray McCully that PACER would address islands countries’ concerns.
He also suggested that New Zealand and Australia reconsider its approach to Fiji.
The Forum had collectively barred Fiji’s political participation in the organisation. But islands countries should not ostracise Fiji, he said.
“Where do we go from here is something that we need to address now, to consider together…we have heard some of Fiji’s views and this is something the Forum will look at over the next few months.
“I am sympathetic to anyone who needs assistance. Fiji needs help now.
“What has happened in Fiji is the exact opposite of what the Forum wanted to achieve, so may be it is time for us to reconsider our approach.”