The World Trade Organization’s Trade Policy Review Body will meet today to review Tonga’s trade policies. The regular review is
The World Trade Organization’s Trade Policy Review Body will meet today to review Tonga’s trade policies.
The regular review is not expected to raise any contentious issues for the country. However, Tonga’s growing debt obligations will tamper hopes that a positive review may lead to an increase in investment. Total public debt rests around 42% of GDP, or $215 million, after receding from a high of 51% in 2015. Nearly half of all debt is held by China’s Export-Import Bank, although payments on those loans were halted last year under the G20 Debt Service Suspension Initiative.
This reliance on Chinese institutions has raised concerns Beijing will seek to leverage concessions from Nuku’alofa to avoid default—an ongoing trend between China and its debtors in Africa and Asia. Looking to shift the balance of influence on the Pacific island, Oceanic powers are expanding their presence in the country, with Australia and New Zealand agreeing to cover the costs of rebuilding Tonga’s Parliament House after it was destroyed by Cyclone Gita in 2018. Expect Tonga to seek new sources of funding, possibly by taking on more debt, in the short and medium-term as tourism revenues remain depressed for the foreseeable future.
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