Tonga Speech

13 October 2009

Launch discussions

Photo; AusAID

Economic report praises Tonga’s plans for renewable energy

Australia's Parliamentary Secretary for International Development Assistance has praised Tonga for taking legislative action to develop the country's renewable energy sector.

Bob McMullan says spikes in food and fuel prices and more recently the global recession, highlight the need for the economies of the Pacific islands and Timor - Leste to become more resilient.

Mr McMullan made the comment at the launch of a new economic report Pacific Economic Survey 2009, engaging with the world in Nuku'alofa today.

"Fuel accounts for more than 25 per cent of Tonga’s imports and when oil prices rose in 2007-08, the Tongan economy suffered a major economic setback," said Mr McMullan. "Inflation increased, growth slowed and there was a large reduction in foreign reserves."

"Renewable energy, along with improved energy efficiency and better management of oil supplies will help protect the country against rises in fuel costs and will lower the price of goods and services for the people of Tonga," said Mr McMullan.

The survey was prepared by AusAID and specialists from the Pacific and Timor-Leste. It examines ways Pacific island nations and Timor-Leste can grow their economies by integrating more fully into the global economy through labour mobility, trade and better management of sudden economic shocks such as rising food and fuel prices.

"The global recession has brought risks to economic growth in the Pacific,” said Mr McMullan. Some countries have performed better than others. Tonga is expected to record positive but negligible growth in 2009. Other economies including Australia and New Zealand will contract."

Remittances continue to underpin much of the domestic economic activity – providing households with additional money and encouraging domestic consumption. Since 2000, remittances to Tonga have increased from US$50 million to US$100 million in 2008, and appear to be holding up in the current economic climate.

"Tonga is to be commended for its active interest and participation in labour migration schemes," said Mr McMullan. "These schemes present people with opportunities to increase their work skills, earn higher incomes and send back more in the way of remittances. This complements efforts by the Government of Tonga to implement reforms to spur private sector growth in the country and create jobs," said Mr McMullan.