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 $492 million, Tonga is the sixth-largest economy in the Pacific, and accounts for 1.4% of regional GDP. Tonga has a population of 106,000 (2022), resulting in a GDP per capita of $4,400, ranking eighth in the Pacific.

Tonga has the second-highest Official Development Assistance (ODA) to Gross National Income (GNI) ratio in the Pacific Islands region, with aid accounting for 55% of national income. In a global context, Tonga remains among the most aid-reliant countries in the world, ranking second among 127 developing countries for its ODA/GNI ratio.

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 tsunami event. Health sector reform and disaster resilience are also key priorities. At 0.739, Tonga’s Human Development Index score ranks 98th out of 193 ranked countries.

Between 2008 and 2022, annual Official Development Finance (ODF) disbursements to Tonga — including grants, loans, and other forms of assistance — averaged $125 million. 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 2021, the loan share dropped to just 4%. The bulk of this lending came from China to fund a rebuild of the Nuku‘alofa business district and a national roads project. The International Monetary Fund ranks Tonga’s risk of debt distress as high, in large part a product of the repayment deadline on Chinese loans.

Development partners and sector trends

Close to nine-tenths of ODF support to Tonga comes from six development partners, led by Australia (22%), China (19%), the World Bank (14%), Japan (13%), New Zealand (12%), and the Asian Development 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 $191 million in development financing with a “principal” focus on either climate adaptation or mitigation. Over this same period, the country has seen $200 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 make up 15% of total spending, well above the regional average of 9%. Conversely, spending on “significant” climate projects in Tonga makes up 12% of incoming funds, slightly below the regional average of 13%.

Between 2008 and 2022, Tonga received $38 million in development financing with a “principal” focus on gender equality, and $324 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. Conversely, “significant” marked gender financing made up 18% of incoming ODF, below the regional average of 21%. The largest project directly targeting gender equality in Tonga was the $7 million Pacific Women Shaping Pacific Development program, funded by Australia.