[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-110539-en":3,"doc-seo-110539-105":31,"detail-sidebar-cat-0-en-105":93},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":20,"is_deleted":4,"is_public":21,"is_downloadable":21,"audit_status":21,"page_count":22,"language":23,"language_code":24,"site_id":25,"html_lang":24,"table_of_contents":26,"faqs":27,"seo_title":28,"seo_description":14,"update_tm":29,"read_time":30},110539,8796095461610,"Oliver","https://ap-avatar.wpscdn.com/davatar_276721f389ce27ea32af1340a28f341c",8,"Research & Report","Tonga - Joint Bank-Fund Debt Sustainability Analysis","Tonga’s external and overall debt distress risk remains high under the Joint World Bank–IMF framework. Prior to the pandemic, public indebtedness declined due to fiscal consolidation, but multiple shocks—COVID-19, Tropical Cyclone Harold, and the 2022 volcanic eruption—pushed debt ratios upward and weakened export performance. Under the baseline, key debt burden indicators breach relevant thresholds beginning in 2022-23 and later from 2032. Strengthening revenue, rationalizing expenditure, and sustaining donor grants are central to restoring fiscal buffers and resilience.","Public Disclosure  \nPub lic Disc losure Authorized  \nApproved by:  \nHassan Zaman and Marcello Estevão (IDA) , Ranil Salgado and Kevin Fletcher (IMF)  \nPrepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF) .  \n\n| TONGA : JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS |  |\n| --- | --- |\n| Risk of external debt distress | High |\n| Overall risk of debt distress | High |\n| Granularity in the risk rating | Sustainable |\n| Application of judgment | No |\n\nThe risk of debt distress rating for Tonga remains high. 1 Before the pandemic, Tonga’s indebtedness gradually declined from FY20152 to FY2019 owing to much-needed fiscal consolidation efforts. Since 2020, however, the economy has been hit by multiple shocks, including the COVID-19 pandemic, tropical cyclone Harold in April 2020, and the volcanic eruption in January 2022. Against this backdrop, the public debt-toGDP ratio rose in 2020 and 2021, reflecting increased expenditures related to reconstruction and COVID- 19 response. The present value (PV) of the external debt-to-exports ratio is expected to breach the indicative threshold in FY2022-23 mainly due to the decline of exports triggered by the aforementioned external shocks. Moreover, under the baseline scenario, the PV of the external debt-to-GDP ratio is expected to breach the threshold starting in FY2032, reflecting large spending needs for climate resilience and SDGs, declining grant inflows, and rising debt repayments to multilateral development banks and China Exim Bank. The PV of the public debt-to-GDP ratio is expected to breach the benchmark starting from FY2032 under the baseline scenario. A tailored one-time large natural disaster shock would imply a significant deterioration in debt sustainability. Long-term debt sustainability hinges on fiscal adjustment and  \ncontinued donor grant inflows to finance the necessary fiscal spending for climate resilience and SDGs. To rebuild fiscal buffers and enhance resilience against shocks, stronger revenue mobilization measures and expenditure rationalization, as well as external donor support in line with the historical trend are needed.  \n1. Tonga’s public debt includes obligations of the central government and central bank. The central bank’s debt is borrowed on behalf of the government. Local governments do not incur debt, nor do other entities in the general government. As of end-June 2021, government-guaranteed debt was small, about 1 percent of GDP. Since the DSA coverage does not include debt of guaranteed and non-guaranteed state-owned enterprises due to data limitations, an additional 2 percent of GDP is added to the contingent liability test. Contingent liabilities also include a standard 5 percent of GDP cost to the government of a financial crisis, which is above the existing stock of financial sector NPLs.3 The DSA is conducted on residency basis.  \n\n|  |\n| --- |\n| 1 Subsectors of the public sector Sub-sectors covered Central government X 2 State and local government X 3 Other elements in the general government X 4 o/w: Social security fund X 5 o/w: Extra budgetary funds (EBFs) X 6 Guarantees (to other entities in the public and private sector, including to SOEs) 7 Central bank (borrowed on behalf of the government) X 8 Non-guaranteed SOE debt\u003Cbr>1 The country's coverage of public debt The general government, central bank Default Used for the\u003Cbr>analysis\u003Cbr>Reasons for deviations from the default settings 2 Other elements of the general government not captured in 1. 0 percent of GDP 0.0 3 SoE's debt (guaranteed and not guaranteed by the government) 1/ 2 percent of GDP 2.0 4 PPP 35 percent of PPP stock 0.0 5 Financial market (the default value of 5 percent of GDP is the minimum value)\u003Cbr>Total (2+3+4+5) (in percent of GDP) 5 percent of GDP 5.0\u003Cbr>7.0\u003Cbr>1/ The default shock of 2% of GDP will be triggered for countries whose government-guaranteed debt is not fully captured under the country's public debt defin","cbCaiauwlVNYSm73","https://ap.wps.com/l/cbCaiauwlVNYSm73","pdf",1193532,5,1,20,"English","en",105,"# Risk Assessment Summary\n## External debt distress risk\n## Overall risk of debt distress\n## Granularity and judgment\n\n# Recent Debt Dynamics and Shocks\n## Pre-pandemic fiscal consolidation\n## Impact of COVID-19 and natural disasters\n\n# Baseline Outlook and Threshold Breaches\n## External debt-to-exports indicator\n## External and public debt-to-GDP indicators\n\n# Coverage, Assumptions, and Contingent Liabilities\n## Public debt coverage scope\n## Contingent liability tests\n\n# Policy Implications and Financing Needs\n## Fiscal adjustment and donor support\n## Revenue mobilization and expenditure rationalization","[{\"question\":\"Why is Tonga’s debt distress risk rated high?\",\"answer\":\"The rating remains high because post-2020 shocks increased expenditures and weakened exports, pushing key debt burden indicators toward or beyond relevant thresholds.\"},{\"question\":\"Which shocks affected Tonga’s debt dynamics after 2020?\",\"answer\":\"The document highlights the COVID-19 pandemic, Tropical Cyclone Harold in April 2020, and a volcanic eruption in January 2022.\"},{\"question\":\"When do the baseline projections indicate threshold breaches?\",\"answer\":\"The PV of the external debt-to-exports ratio is expected to breach the indicative threshold in FY2022-23, and the PV of the external debt-to-GDP ratio is expected to breach the threshold starting in FY2032.\"}]","Tonga - Joint Bank-Fund Debt Sustainability Analysis | PDF",1784485900,50,{"code":4,"msg":32,"data":33},"ok",{"site_id":25,"language":24,"slug":34,"title":13,"keywords":35,"description":14,"schema_data":36,"social_meta":88,"head_meta":90,"extra_data":92,"updated_unix":29},"tonga-joint-bank-fund-debt-sustainability-analysis","",{"@graph":37,"@context":87},[38,55,70],{"@type":39,"itemListElement":40},"BreadcrumbList",[41,45,49,52],{"item":42,"name":43,"@type":44,"position":21},"https://docshare.wps.com","Home","ListItem",{"item":46,"name":47,"@type":44,"position":48},"https://docshare.wps.com/document/","Document",2,{"item":50,"name":12,"@type":44,"position":51},"https://docshare.wps.com/document/research-report/",3,{"item":53,"name":13,"@type":44,"position":54},"https://docshare.wps.com/document/tonga-joint-bank-fund-debt-sustainability-analysis/110539/",4,{"url":53,"name":13,"@type":56,"author":57,"headline":13,"publisher":59,"fileFormat":62,"inLanguage":24,"description":14,"dateModified":63,"datePublished":64,"encodingFormat":62,"isAccessibleForFree":65,"interactionStatistic":66},"DigitalDocument",{"name":9,"@type":58},"Person",{"url":42,"name":60,"@type":61},"DocShare","Organization","application/pdf","2026-07-30","2026-07-19",true,{"@type":67,"interactionType":68,"userInteractionCount":20},"InteractionCounter",{"@type":69},"ViewAction",{"@type":71,"mainEntity":72},"FAQPage",[73,79,83],{"name":74,"@type":75,"acceptedAnswer":76},"Why is Tonga’s debt distress risk rated high?","Question",{"text":77,"@type":78},"The rating remains high because post-2020 shocks increased expenditures and weakened exports, pushing key debt burden indicators toward or beyond relevant thresholds.","Answer",{"name":80,"@type":75,"acceptedAnswer":81},"Which shocks affected Tonga’s debt dynamics after 2020?",{"text":82,"@type":78},"The document highlights the COVID-19 pandemic, Tropical Cyclone Harold in April 2020, and a volcanic eruption in January 2022.",{"name":84,"@type":75,"acceptedAnswer":85},"When do the baseline projections indicate threshold breaches?",{"text":86,"@type":78},"The PV of the external debt-to-exports ratio is expected to breach the indicative threshold in FY2022-23, and the PV of the external debt-to-GDP ratio is expected to breach the threshold starting in FY2032.","https://schema.org",{"og:url":53,"og:type":89,"og:title":13,"og:site_name":60,"og:description":14},"article",{"robots":91,"canonical":53},"index,follow",{"doc_id":7,"site_id":25},{"code":4,"msg":5,"data":94},[95,99,103,107,111,115,120,123,127,130,134],{"id":21,"doc_module":4,"doc_module_name":47,"category_name":96,"show_sort_weight":97,"slug":98},"Story & Novel",90,"story-novel",{"id":48,"doc_module":4,"doc_module_name":47,"category_name":100,"show_sort_weight":101,"slug":102},"Literature",80,"literature",{"id":54,"doc_module":4,"doc_module_name":47,"category_name":104,"show_sort_weight":105,"slug":106},"Exam",70,"exam",{"id":20,"doc_module":4,"doc_module_name":47,"category_name":108,"show_sort_weight":109,"slug":110},"Comic",60,"comic",{"id":112,"doc_module":4,"doc_module_name":47,"category_name":113,"show_sort_weight":30,"slug":114},6,"Technology","technology",{"id":116,"doc_module":4,"doc_module_name":47,"category_name":117,"show_sort_weight":118,"slug":119},7,"Healthcare",40,"healthcare",{"id":11,"doc_module":4,"doc_module_name":47,"category_name":12,"show_sort_weight":121,"slug":122},30,"research-report",{"id":124,"doc_module":4,"doc_module_name":47,"category_name":125,"show_sort_weight":22,"slug":126},9,"Religion & Spirituality","religion-spirituality",{"id":22,"doc_module":4,"doc_module_name":47,"category_name":128,"show_sort_weight":22,"slug":129},"World Cup","world-cup",{"id":131,"doc_module":4,"doc_module_name":47,"category_name":132,"show_sort_weight":131,"slug":133},10,"Lifestyle","lifestyle",{"id":135,"doc_module":4,"doc_module_name":47,"category_name":136,"show_sort_weight":20,"slug":137},19,"General","general"]