Tonga devalues
p. 17 · Read in the full issue
Financial crisis Tonga devalues
Tonga, from midnight on September 19, devalued its currency by 6% against the Australian dollar.
The Ministry of Finance said the move was designed to make more money available to the government, to stimulate the economy and im prove the position of the country’s overseas reserves. The government found itself short of ready cash to meet everyday commitments.
Devaluation would increase foreign earnings from exports. The value of overseas aid would increase, and so would remittances from overseas.
Against all those benefits, however, the cost of living would increase because imports would be dearer. But dearer imports of items such as eggs and poultry meat should give an in centive to local farmers to become more competitive in the local market.
Devaluation should give a spur to in crease production for exports.
At the same time the government decided on a house-cleaning measure to cut out waste in government departments. Euphemistically, this measure was described as directing the Ministry of Finance to be the co ordinating and executing authority for supervising measures to alleviate financial difficulties facing the government.
All government departments have been told there will be a review of departmental revenue collections with the obiect of raising current charges.
The daily labour force is likely to be reduced, and no more daily paid labour will be recruited. Departments will be required to prove that staff recruitment is absolutely necessary. If they don’t meet those conditions, the Treasury may refuse to pay wages.
Overseas travel will be cut to a minimum, and will only be allowed where benefit will accrue to the government.
Internally, only essential inter island travel will be authorised. The frequency, number of officers on a trip and the duration of trips will be carefully controlled. Departments will be required to watch out for abuse and misuse of government vehicles ie private use of them during lunchtime, outside office hours and during weekends. In future, overtime will be limited to “absolutely essential” work.