TONGA BANK GOVERNOR WARNS OF HARD TIMES AHEAD

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By Filo ‘Alai‘ola

NUKU‘ALOFA, Tonga (December 4, 1998 - Tonga Times)---The Governor of the Reserve Bank, Siosiua ‘Utoikamanu, issued a warning last week, that if Tonga's dwindling foreign reserves continue to fall, the country may experience troubling shortages in overseas food supplies, oil, medicine, and even a major worker layoff from the civil service plus a significant rise in inflation.

‘Utoikamanu , during a press conference at the Reserve Bank Building last Wednesday, gave a gloomy picture of the state of the economy. His major concern was that the amount of foreign reserves will only last for less than two months, despite statistics showing in the June quarter that foreign reserves will last two and half months.

"We are heading for very difficult times," was the message from the Reserve Bank.

The Governor said that the Government should initiate economic reforms and that other exports need to be boosted to supplement squash pumpkin as the country's major export crop.

Foreign reserves recorded for the June quarter were at P21.3 million, a 35.1% drop from P32.8 million, recorded for the same period last year.

(NOTE: US$ 1 = P1.5752 on December 4, 1998.)

By the time Parliament went into recess last month, the foreign reserves had dwindled down to P19 million.

The Governor reported that the Government was setting aside P10 million from its Trust Fund overseas as a back up in case things got worse.

Tonga's foreign reserves continue to be affected by the increasing trade deficit with falling exports and rising imports.

For additional reports from the Tonga Times, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/ Tonga Times.

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