China has defended its concessional loans to Tonga, calling them acts of “friendship and equal cooperation,” following media scrutiny over the country’s debt burden.
In a statement, the Chinese Embassy in Tonga rejected suggestions that its loans have harmed the nation. “When Tonga was in trouble and asked for loans to ease economic pressure, China was the only country to lend a helping hand,” the statement read.
“We hope an objective and fair position could be observed on this matter without misleading the public with groundless speculation,” the statement concludes.
China’s response follows an ABC Pacific report on 21 April revealing Tonga still owes around USD$190 million in external debt with two-thirds of it to China. Former Prime Minister Siaosi Sovaleni said, “We took the loan, benefited from it, so we must pay it back. Otherwise, we are just passing this burden on to our children and their children.”
The loans were used to help Tonga rebuild after the 2006 riots, which destroyed much of Nukuʻalofa. China lent about $118 million pa’anga with funds disbursed between 2009 and 2012.
The Export-Import Bank of China (CEXIM) provided three concessional loans to Tonga. One, for the International Dateline Hotel project, was fully repaid in 2016. The remaining loans, for Nuku’alofa’s central business district reconstruction and national road upgrades, are still being repaid. The outstanding balance stands at approximately USD$58 million.
The infrastructure projects included rebuilding central business district infrastructure, roads, and the Vuna Wharf, carried out by Chinese firms China Civil Engineering Construction Corporation (CCECC) and China Railway Construction Corporation (CRCC) .
Despite a two per cent interest rate and extended grace periods now totalling 15 years, debt repayments surged to 3.5 per cent of GDP in 2024. A joint IMF and World Bank report warns Tonga remains at high risk of debt distress.
Still, China maintains the loans brought “real benefits to the Tongan people” and has offered multiple rollovers to ease pressure on the government.
Tonga is expected to pay off the balance in 2028.
