Banking & Finance in Small States: Issues and Policies
Malta Workshop 11-19 April 2011
by Mr. Kaho o vailahi ‘Ofa
Disclaimer
This presentation is the sole views and opinions of the
author and does not reflect the views and opinion of
the Retirement Fund Board of Tonga.
Outline
Tonga in Brief
Institutional Set-Up
Main Strengths and Weaknesses
Possible Opportunities and Areas for Reform
Tonga in Brief 1
176 Islands (Divided into 3 Major Groups)
Total Land Area: 748 Square Kilometers
Population (Est. 2009): 104,000
Exchange Rate: USD 1 : TOP 2
GDP per capita (Est. 2010): USD 6,300 per head
Real GDP Growth (Est. 2010/2011): 1.25%
Annual Average Inflation (Est. Jun 11): 6%
Tonga in Brief 2
Weighted Average Term Deposit Rate: 3.95% (Feb 11)
Weighted Average Lending Rate: 11.40% (Feb 11)
Banking System Liquidity: $77.7 million (Feb 11)
Retirement Fund Board: $66.6 million (86% Feb 11)
Institutional Set-Up
Reserve Bank of Tonga (Monetary Policy & Regulator)
Banks (3 Commercial Banks & 1 Development Bank)
Retirement Funds
Insurance
Finance Companies
Micro-Finance
Credit Unions
Regulator
Reserve Bank
Reserve Bank of Tonga Act
RBT Regulations
Currency Regulations
Financial Institutions Act
Foreign Exchange Control Act
Money Laundering and Proceeds of Crime Act
Prudential Supervision Statements
Retirement Fund
Retirement Fund Board Act & Regulations
Credit Union
Credit Union Act
Main Strengths and Weaknesses
Strengths
Close coordination
between institution
Weaknesses
Limited Investment
Opportunity due to Weak
Economy Est. growth of
1.25%, -9.4% Private Sector
Credit Growth
Non-performing Loans to
Total Loans 15.3% as of
June 2010
Limited Regulatory
Coverage/Development
Still with Basel I
Possible Opportunities and Areas
for Reform
Huge opportunities to learn from other small states
and develop the current financial system
Widen the coverage of the regulator to include;
Retirement Funds
Insurance
Securities Commission
Consumer Complaints Commission
Concluding Remarks
Important to strengthen the Small States Network to;
Promote Malta’s resilient attitude to other small states.
Foster close network linkages between small states
regulatory & financial staffs.
Provide a united forum for discussion and lobby of
small states issues.
For less developed small states to learn, revise and
adopt financial developments from leading small
states instead of trying to reinvent the wheel.
Thank You