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NUKU‘ALOFA, Tonga (January 6, 1999 - PACNEWS)---Tonga's Development Bank is drastically scaling down its loan assistance to the country's squash industry because of the combined effects of low international market prices and a prolonged drought.

The Bank has set aside US$ 620,000 for squash loans this fiscal year, compared to last year's allocation of US$ 1.2 million, because of grower defaults in loan repayments.

The Bank is trying to recover US$ 620,000 in repayments due.

1997 was a record low for Tonga's squash producers because international squash prices bottomed at US$ 0.30 per kilogram, the lowest ever.

This resulted in growers receiving lower yields, although the crop quantity was more than twice the 1998 size.

Although Tonga's squash producers also get financial assistance from other banks, the Development Bank's policy towards the growers has been the most flexible.

The new loan restrictions are expected to be offset by financial assistance that major squash exporters say they are capable of giving their growers this year.

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