Country Details

No Stock Exchange

Tonga has a small and underdeveloped financial sector. There are three registered commercial banks: Westpac, the largest, ANZ and MBf. Westpac and ANZ are Australian multinationals, whilst MBf is Malaysian owned. Westpac began as the Bank of Tonga in 1974 and has been a fully owned subsidiary of Westpac Banking Corporation since 2008. Westpac provides full commercial and savings facilities for Tongan residents. ANZ and the MBf Banking Group have operated in Tonga since 1993 and they too provide full commercial banking facilities. There is a government-owned developmental financial institution, Tonga Development Bank, which lends money to key sectors of the business community including agriculture, manufacturing, and tourism. It also provides savings accounts.

From 1900 to 1970, Tonga had British protected state status, with the United Kingdom looking after its foreign affairs under a Treaty of Friendship. The country never relinquished its sovereignty to any foreign power. In 2010, Tonga took a decisive path towards becoming a constitutional monarchy rather than a traditional absolute kingdom, after legislative reforms passed a course for the first partial representative elections.Tonga is a constitutional monarchy. Reverence for the monarch replaces that held in earlier centuries for the sacred paramount chief, the Tu?i Tonga. Criticism of the monarch is held to be contrary to Tongan culture and etiquette. King Tupou VI (a descendant of the first monarch), his family, powerful nobles and a growing non-royal elite caste live in much wealth, with the rest of the country living in relative poverty. The effects of this disparity are mitigated by education, medicine, and land tenure.Tonga provides for its citizens a free and mandatory education for all, secondary education with only nominal fees, and foreign-funded scholarships for post-secondary education.The pro-democracy movement in Tonga promotes reforms, including better representation in the Parliament for the majority commoners, and better accountability in matters of state. An overthrow of the monarchy is not part of the movement and the institution of monarchy continues to hold popular support, even while reforms are advocated. Until recently, the governance issue was generally ignored by the leaders of other countries, but major aid donors and neighbours New Zealand and Australia are now expressing concerns about some Tongan government actions.Following the precedents of Queen S?lote and the counsel of numerous international advisors, the government of Tonga under King T?UFA??hau Tupou IV (reigned 1965–2006) monetised the economy, internationalised the medical and education system, and enabled access by commoners to increasing forms of material wealth (houses, cars, and other commodities), education, and overseas travel.Tongans have universal access to a national health care system. The Tongan constitution protects land ownership: land cannot be sold to foreigners (although it may be leased). While there is a land shortage on the urbanised main island of Tongatapu (where 70% of the population resides), there is farmland available in the outlying islands. The majority of the population engages in some form of subsistence production of food, with approximately half producing almost all of their basic food needs through farming, sea harvesting, and animal husbandry. Women and men have equal access to education and health care and are fairly equal in employment, but women are discriminated against in landholding, electoral politics, and government ministries.Tonga's economy is characterised by a large non-monetary sector and a heavy dependence on remittances from the half of the country's population who live abroad (chiefly in Australia, New Zealand and the United States). The royal family and the nobles dominate and largely own the monetary sector of the economy – particularly the telecommunications and satellite services. Tonga was named the sixth most corrupt country in the world by Forbes magazine in 2008.Tonga was ranked the 165th safest investment destination in the world in the March 2011 Euro money Country Risk rankings.

The manufacturing sector consists of handicrafts and a few other very small scale industries, which contribute only about 3% of GDP. Commercial business activities also are inconspicuous and, to a large extent, are dominated by the same large trading companies found throughout the South Pacific. In September 1974, the country's first commercial trading bank, the Bank of Tonga, opened.

Tonga's development plans emphasise a growing private sector, upgrading agricultural productivity, revitalising the squash and vanilla bean industries, developing tourism, and improving communications and transport. Substantial progress has been made, but much work remains to be done. A small but growing construction sector is developing in response to the inflow of aid monies and remittances from Tongans abroad. In recognition of such a crucial contribution the present government has created a new department within the Prime Minister's Office with the sole purpose of catering for the needs of Tongans living abroad. Furthermore, in 2007 the Tongan Parliament amended citizenship laws to allow Tongans to hold dual citizenship.

The tourist industry is relatively undeveloped; however, the government recognises that tourism can play a major role in economic development, and efforts are being made to increase this source of revenue. Cruise ships often stop in Vava?u, which has a reputation for its whale watching, game fishing, surfing, beaches and is increasingly becoming a major player in the South Pacific tourism market.

Tonga's postage stamps, which feature colourful and often unusual designs (including heart-shaped and banana-shaped stamps), are popular with philatelists around the world.

In 2005, the country became eligible to become a member of the World Trade Organization. After an initial voluntary delay, Tonga became a full member of the WTO on 27 July 2007.

The Tonga Chamber of Commerce and Industry (TCCI), incorporated in 1996, endeavours to represent the interests of its members, private sector businesses, and to promote economic growth in the Kingdom.

Tonga is home to some 106,000 people, but more than double that number live overseas, mainly in the US, New Zealand and Australia. Remittances from the overseas population has been declining since the onset of the 2008 global economic crisis. The tourism industry is improving, but remains modest at under 90,000 tourists per year.

Famous People

The pa?anga is the currency of Tonga. It is controlled by the National Reserve Bank of Tonga (Pangik? Pule Fakafonua ?o Tonga) in Nuku?alofa. The pa?anga is not convertible and is pegged to a basket of currencies comprising the Australian, New Zealand, United States dollars and the Japanese yen. The pa?anga is subdivided into 100 seniti. The ISO code is TOP, and the usual abbreviation is T$ (¢ for seniti). In Tonga the pa?anga is often referred to in English as the dollar and the seniti as the cent. There is also the unit of hau (1 hau = 100 pa?anga), but this is not used in everyday life and can only be found on commemorative coins of higher denominations.The pa?anga was introduced on 3 April 1967. It replaced the pound at a rate of 1 pound = 2 pa?anga. Until 11 February 1991, the pa'anga was pegged to the Australian dollar at par. Since that time, a basket of currencies is taken (see above) and the pa?anga has continuously declined. As in 2006, one needs about T$1.60 to get 1 Australian dollar. Official exchange rates are released daily by the National Reserve Bank, established 1 July 1989, but rather towards the end of the day than early in the morning.In 1967, circulating coins were introduced in denominations of 1, 2, 5, 10, 20 and 50 seniti and 1 and 2 pa?anga. The 1 and 2 seniti were struck in bronze with the other denominations in cupro-nickel. The 50 seniti, 1, and 2 pa?anga were only struck in small numbers as these denominations were also issued in note form. In 1974, dodecagonal (twelve-sided) 50 seniti were introduced but 50 seniti banknotes continued to be issued until 1983. In 1974, 1 seniti coins were struck in brass rather than bronze, but reverted to bronze in 1975.In 1975, a new series of coins was issued, themed around FAO and food production and featuring a new portrait style effigy of the king. This was followed by another series of similar theme in 1981. 1 and 2 Pa'anga coins continued to be issued. Starting in 1978 the 1 Pa'anga coins were redesigned with an innovative, or at least unique rectangular shape while the 2 Pa'anga (depicted on the right) remained round and continued to be one of the world's largest circulating coins at the time, larger even than standard "English crown sized" coins. The reverses of both were changed annually to commemorate a different FAO goal or event. Later seven sided Christmas themed pa'anga coins also exist. However, due to the 2 Pa'anga coin's large size and weight and the awkward shape of the 1 pa'anga, they failed to compete against the 1 and 2 Pa'anga notes that were simultaneously issued so production of these denominations ended in the 1980s due to low commercial demand. All 1 and 2 pa'anga coins still remain legal tender but are rarely used.

In 2002, nickel-plated steel replaced cupro-nickel in the 10, 20, and 50 senti and the 5 senti in 2005. The change did not occur in the 5 senti initially as there was still a reasonable quantity of coins in stock at the time of the change. The move was made to reduce costs in production of the coins.

The weight of the coins was also slightly reduced, although they remained the same approximate size as earlier dated coins. In 2011, commercial demand for 20 and 50 seniti prompted these denominations to be issued featuring the effigy of Tupou IV posthumous, who had died in 2006. A new obverse design for George Tupou V had not yet been made or selected at this time, possibly due to increased health concerns regarding the latter monarch, who died in March 2012.

For a brief period, some of the higher denomination coinage from the 1967-1968 series was "countermarked" with commemoration stamps that were added to the coin after being struck. The most distinct of these is Oil Search series which was plated in gold or "gilt." Some countermarked pieces were released into circulation but many were also sold to collectors. Current circulating coins are in denominations of 1, 2, 5, 10, 20 and 50 seniti. The one and two seniti coins are becoming less common due to low value and may only be readily available for months after a release by the banks. Total prices in shops are usually rounded to the nearest 5 or 10 seniti.

In 2011, Tonga had announced plans to introduce a new and more modern series of coins shortly after neighboring Samoa and Fiji had done so, and on 3 March 2015 the Royal Australian Mint announced the production of new coins that would begin release later that year. Dignitaries, including Tongan Princess Angelika Tuku'aho whose father will feature on her county's coins took turns striking the coins at a ceremony. "I'm very proud and honoured to be able to strike the coins today," she said. "This is also in celebration of His Majesty's coronation that is coming up in July.

The first series of coins showed Queen Salote Tupou III, two years after her death. The reverse designs were Tu'i Malila (a radiated tortoise presented to the Tongan royal family by Captain Cook in 1777) on the 1 and 2 seniti, wheat sheaves and a stylized depiction of the constellation Crux on the 5 and 10 seniti, and the Royal Tongan coat of arms on the higher denominations. From 1968, the portrait of King Taufa'ahau Tupou IV appeared, facing right, with the first year issue commemorating the coronation event. Since 1975, all coins have borne the word "Tonga" on the obverse and the inscription "Fakalahi me?akai" (Tongan: "Grow more food") and the denomination on the reverse. All 1975–2011 coins are FAO themed. The King is shown in military uniform in portrait format rather than profile.

In 1967, notes (bearing the portrait of Queen Salote Tupou III) were introduced by the government in denominations of ½, 1, 2, 5 and 10 pa?anga. From 1974, the portrait of King Taufa'ahau Tupou IV appeared on the notes. ½ pa?anga notes were issued until 1983, with 20 pa?anga notes introduced in 1985, followed by 50 pa?anga in 1988. In 1992, the National Reserve Bank of Tonga took over production of paper money. On 30 July 2008, a new banknote series with greater security features was introduced featuring George Tupou V and a redesigned look. During this issue, a 100 pa?anga banknote was introduced for the first time.

The obverse of Tongan notes feature text in the Tongan language and shows the portrait of the monarch. The reverse is in English language and shows typical motives and landmarks of Tonga: the Ha?amonga ?a Maui Trilithon, a humpback whale, burial mounds, school students and rugby players, the royal palace, the Tongan Development Bank, the Port of Vava?u(twice, once depicted as it was around 1900, and the other in contemporary depiction), and ngatu making. On June 29, 2015, the National Reserve Bank of Tonga introduced a new family of pa?anga banknotes in six denominations, from 2 to 100 pa?anga. They feature a portrait of the current king of Tonga.