TONGA'S CABINET APPROVES ECONOMIC RECOVERY PLAN

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NUKU‘ALOFA, Tonga (January 4, 1999 - PACNEWS/Radio Tonga)---Tonga's cabinet has approved budgetary guidelines prepared by the Minister of Finance to help the national economy recover from last year's depression.

Finance Minister Tutoatasi Fakafanua has described Tonga's economic situation as alarming.

Gross domestic product and foreign reserve figures have continued to drop, while the budget deficit has ballooned over the past three years.

Acting Secretary for Finance, Dr. Ngongo Kioa, said GDP dropped by 4.4 percent in the 1996-97 financial year, with a further 1.5 percent drop in the 1997-98 fiscal year.

Dr. Kioa said a contributing factor is the requirement imposed by the Reserve Bank on commercial banks of a 30 percent minimum deposit on all loans.

Other reasons for the crisis, he noted, include droughts and cyclones affecting Tonga's main exports of squash and vanilla, as well the effects of the global recession.

However, Finance Minister Fakafanua aims for double-digit economic growth in three years.

He plans on fully rationalizing and refocusing government services on the core needs of the government.

Tightening up travel and fuel expenses is expected to save the government enough money to help it launch a new superannuation and pension package in July.

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