THE discussion on the Government Budget Estimates for FY 2024/25 has begun in the Whole House Committee following the second reading of the Appropriation Bill on Tuesday.
Upon the Lord Speaker’s direction, the Budget Estimates along with the budget programs including the Public Accounts Committee’s report on the Estimates and Government Ministries Corporate Plans for further deliberation in the Whole House Committee.
In his Budget Statement the Hon. Minister of Finance and National Planning Tiofilusi Tuieti announced that the total Government balanced Budget Estimates 2024/25 totals at TOP$899.2 million. Of that amount $452.3m is recurrent (50.3 percent) financed by Government, and $446.9m is development (49.7 percent) which is donor cash from government overseas development partners.
The Estimates 2024/25 is an increase by $115.0m (or 14.7 percent) from the total budget allocation in the current Financial Year (FY) 2024. The cash amount for next fiscal year is an increase of $148.4m or 28.8 percent from the current fiscal year, with $32.8m increase in recurrent expenses and $115.6m increase in development cash projects and revolving funds.
Hon. Tiueti said the proposed balanced budget which must be enforced for the next financial year consists of 73.9 percent or $664.2m in cash and 26.1 percent or $235.0m in-kind contributions.
This year’s budget theme is “Building the foundations for sector-driven economic growth and sustainability.” Hon. Tiueti said that despite the difficulties that Tonga had faced in the past years including the Covid-19 pandemic and the HTHH volcanic eruptions, Government is optimistic for a more prosperous and resilient Tonga. And that the aim of this budget is to reach the desired level of economic prosperity, as described in the Tonga Sustainable Development Framework (TSDF) II, which concludes in 2025 and continued by TSDF III.
Hon. Tiueti said the budget proposal pledges the Government’s unwavering commitment to its greatest asset - the people of Tonga. It prioritises putting the people first and its commitment to building a strong and inclusive society where every individual can thrive.
He also reassured Parliament that Government will continue to invest in education and healthcare, ensuring a skilled and healthy population ready to contribute to our Kingdom’s progress. The focus is on social sector projects, particularly in improving healthcare standards, enhancing the quality of education, and implementing social safety programs to assist disadvantaged individuals and families in need.
To improve the social wellbeing of the Tongan citizens and in line with its budget priority of putting people first, Government proposes to increase grants to non-government schools with an increase from $700 to $770 in secondary schools. Proposed increase from $1,200 to $1,320 for TVET schools. Government also proposed a free education up to form 5 of government schools only and a grant budget allocation of 0.1 million for Hango School in ‘Eua.
The Budget 2024-2025 also made a proposal to increase the monthly stipend to the elderly group for the current $100 to $110 per month. The current $80 will receive $90 stipend monthly.
The proposed Budget also made a budget allocation to increase the monthly stipend for less disadvantaged groups by 10 percent specifically for individuals with:
- one form of disability(minor) - to increase from $50 to $60 per month.
- two forms of disability (medium) – to increase from $80 to $90 per month, and
- three or more forms of disability (extreme/severe) - to increase from $100 to $110 per month.
Government also proposes a five percent Cost of Living Adjustment (COLA), to offset the impact of rising prices on the standard of living of civil servants. The wage bill related to expenditures remains high, with the Ministry of Education and Training and Ministry of Health seeing significant increases in their budgets.
On investment, the Hon. Finance Minister did mention that the Budget for 2025 aims to enhance growth by increasing investment in collaboration with important partners with the goal of improving economic growth. As a result, $30.0 million will be dedicated over the medium term to supporting growth initiatives in the agriculture, fisheries, and tourism sectors over the next three years, beginning in this budget.
This Budget will continue to support the ongoing program and activities under nine Government Priority Areas (GPAs), which includes 1. Building Climate and Economic Resilience, 2. Poverty Alleviation and Social Protection, 3. Reduce the supply and use and harm of illicit drugs, 4-5 Quality Education and Healthcare, 6. Access to Quality and Affordable Government services, 7. Progressing Economic Growth, 8. Improve Quality and Access to Public Infrastructure and lastly to Strengthen Bilateral Agreement.
These are grouped into three thematic areas: (i) Building National Resilience to external threats and risks, (ii) Improving the quality services and affordability of government services, and (iii) Progressive Economic Growth.
The economic growth in the current financial year grew by 2.9 percent. The 2025 budget predicts an average economic growth rate of 2.8 percent over the medium term from FY 2025 to FY 2027. It also forecasts a fiscal surplus of 3.41 percent of GDP over the medium term through revenue measures and fiscal restructuring. Hence, Hon. Tiueti noted that Government should continue a rigorous program of fiscal consolidation, active public debt management, and focus on implementing revenue reform to improve domestic revenue collection and meet loan repayments commitment.
On inflation, Hon. Tiueti reported that the annual inflation has decreased to 3.6 percent in February 2024 in compared to 6.3 percent in December 2023 and 9.3 percent inflation in December 2022. The 3.6 percent in February 2024 is below the inflation 5.0 percent reference rate of National Reserve Bank of Tonga. Therefore, Government projected that inflation will continue to stay below the reference rate for the most part of 2024.
Hon. Tiueti also noted that that overseas labour schemes overseas have a significant impact on our economy. Tonga's economic growth and development face a significant challenge because departure of skilled workers to labour programs in Australia and New Zealand. Government maintains that while the remittances from these workers are crucial for income, such scheme has resulted in a labour shortage that is hindering productivity and innovation.
Government aims to tackle these problems by providing training and certification opportunities, where workers can gain in-demand skills that align with the evolving needs of the labour market.
The Hon. Finance Minister concluded his Budget Statement by calling on all key stakeholders to cooperate and collaborate in order to perform the government's plans and initiatives successfully for the growth and development of our Kingdom. He also expressed his deep appreciation for the ongoing support from our development partners and Tongans living abroad.