Tonga

Key trends and development challenges

Tonga is a small island developing state located in the Pacific sub-region of Polynesia. With a GDP of $508 million, Tonga is the sixth-largest economy in the Pacific Islands and accounts for 1.2% of regional GDP. Tonga has a population of 105,000, resulting in a GDP per capita of $4,900, ranking eighth in the Pacific.

Tonga has the second-highest official development assistance (ODA) to gross domestic product (GDP) ratio in the Pacific Islands region, with aid accounting for 35% of GDP. In a global context, Tonga remains one of the most aid-reliant countries in the world, with its aid as a share of GDP ranking second among 125 developing countries.

The Tongan government’s development agenda is focused on the continued recovery from the Covid-19 pandemic and the Hunga Tonga–Hunga Ha‘apai volcanic eruption and subsequent tsunami event. Health sector reform and disaster resilience are also key priorities. At 0.769, Tonga’s Human Development Index score ranks 92nd out of 193 ranked countries.

Between 2008 and 2023, annual official development finance (ODF) disbursements to Tonga — including grants, loans, and other forms of assistance — averaged $140 million. Just over 10% of the development finance received by Tonga since 2008 has come in the form of loans. As a share of Tonga’s total received development support, loans have declined significantly over the past decade. Between 2008 and 2011, loans made up 23% of total financing to the country. Between 2019 and 2023, the loan share dropped to less than 3%. The bulk of this lending came from China to fund a rebuild of the Nuku‘alofa business district and a tied national roads project, with debt repayments for this project currently weighing heavily on the government budget. The International Monetary Fund ranks Tonga’s risk of debt distress as high, in large part a product of the 2029 repayment deadline on Chinese debts.

Development partners and sector trends

More than 80% of ODF support to Tonga in 2023 came from four development partners, led by Australia (46%), New Zealand (16%), China (12%), and the World Bank (9%).

ODF in Tonga was largely consistent with regional trends in terms of sector distribution. The country sees moderately high levels of spending on transport and energy, and a smaller focus on health. Distinct from regional trends, infrastructure has remained a dominant focus of incoming ODF disbursements in Tonga over the past decade.

Since 2008, Tonga has received $361 million in development financing with a “principal” focus on either climate adaptation or mitigation. Over this same period, the country has seen $244 million in development financing with a “significant” focus on climate outcomes. Since 2018, Tonga has seen a substantial rise in spending on climate-targeting projects. As a share of total ODF received by Tonga, “principal” climate projects made up 16% of total spending, well above the regional average of 8%. Conversely, spending on “significant” climate projects in Tonga made up 11% of incoming funds, in line with the regional average of 11%.

Between 2008 and 2023, Tonga received $41 million in development financing with a “principal” focus on gender equality, and $264 million in development financing with a “significant” focus on gender equality. “Principal” gender equality financing constituted 2% of ODF received by the country, in line with the regional average of 2%. Conversely, “significant” marked gender financing made up 12% of incoming ODF, well below the regional average of 22%. The largest project directly targeting gender equality in Tonga was the $7 million Pacific Women Shaping Pacific Development project, funded by Australia.