The Government’s largest-ever national budget, totalling $992.8 million for 2025-26 includes a falling debt load and new local bond issue to finance projects.
The budget represents a 6.7% increase on the previous year, with $603 million allocated to recurrent spending and $389.8 million for development projects. Despite the growth, the government has projected a deficit of $29.1 million.
“We’re addressing the key issues in various sectors which informs how this budget was prepared,” Prime Minister Hon. Dr ‘Aisake Eke told reporters during last Friday’s press conference.
To cover the deficit, government will issue $30 million in local currency bonds at 3% interest, aiming to stimulate private sector access to capital, a first-time initiative for government
Eke also added that Tonga’s public debt is decreasing and government is not taking out new loans. Public debt is forecast at $428.9 million by the end of the current financial year, a drop of $14.5 million from 2024 and accounts for 34.2% of GDP.
According to the official budget estimate, 84% of this debt is held in foreign currencies, with nearly half in IMF Special Drawing Rights, presenting the government with the risk of international currency fluctuations.
Eke said that the government’s key focus is reviving local businesses which will then improve government tax revenue.
The budge is still under review by the Finance and Public Accounts Committee before debate continues in the next Parliament session on 16 June.
