Tonga's Minister of Finance is forecasting the country will start growing again in the new financial year starting in July.
This comes after contractions of 0.4 percent and 1.2 percent in the past two years.
Radio Tonga reports Afu'alo Matoto as telling Parliament that the past year has been particularly challenging.
He says in February this year remittances hit their lowest monthly level in seven years, while the country has also suffered a drought and a cyclone, as well as the tsunami in Niuatoputapu and the Princess Ashika disaster.
The Minister says revenue fell almost 20 percent below estimates, putting a lot of pressure on the Government to make deep and painful cuts to services.
He says the health and education budgets have been exempted from cutbacks in the new estimates which allow for expenditure of just over 108 million US dollars.
Donors will be needed to cover a significant deficit.