15 Jul 2004

Tonga Finance Minister stresses the importance of containing inflation

7:36 pm on 15 July 2004

The Minister of Finance in Tonga says lowering inflation in the Kingdom is now the big challenge for monetary policy and the other economic policies that support it.

Siosiua 'Utoikamanu says monetary policy supports the long-term economic strength of Tonga by maintaining the gross official international reserves at between three to four months of import cover.

He says prudent fiscal policies and continued sound management of the government's financial balance sheet should ensure that these reserves remain at a level that everyone feels comfortable with.

However the minister says inflation must be controlled to provide the medium-term economic stability that is also needed.

He says inflation has to be under control at the time of the planned changes in indirect taxation.