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 $646 million, Tonga is the sixth-largest economy in the Pacific and accounts for 1.5% of regional GDP. Tonga has a population of 104,379, resulting in a GDP per capita of $6,189 — ranking seventh in the Pacific. At 0.769, Tonga’s Human Development Index score ranks 92nd out of 193 ranked countries.

Tonga has the second-highest official development assistance (ODA) to GDP ratio in the Pacific, 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.

Real GDP has grown by an average of just 1.5% over the past decade, with little change in the structure of the economy; the government attributes improvements in poverty and living standards largely to remittances and external grants rather than economic transformation. Real growth of 2.5% was forecast for FY2025.

Between 2008 and 2024, annual official development finance (ODF) disbursements to Tonga — including grants, loans, and other forms of assistance — averaged $145 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 below 3%. The bulk of this lending came from China, funding a rebuild of the Nuku’alofa business district and a tied national roads project, repayments for which now weigh 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

Between 2008 and 2024, the vast majority of ODF support to Tonga came from its largest development partners, led by Australia (25%), China (18%), the World Bank (14%), New Zealand (13%), and Japan (12%).

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 $298 million in development financing with a “principal” focus on either climate adaptation or mitigation. Over this same period, the country has seen $463 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 12% of total spending, well above the regional average of 8%. Spending on “significant” climate projects in Tonga made up 19% of incoming funds, slightly above the regional average of 17%.

Between 2008 and 2024, Tonga received $58 million in development financing with a “principal” focus on gender equality, and $501 million in development financing with a “significant” focus on gender equality. “Principal” gender equality financing constituted less than 1% of ODF received by the country, below the regional average of 2%. Similarly, “significant” marked gender financing made up 20% of incoming ODF, slightly below the regional average of 23%. The largest project directly targeting gender equality in Tonga was the $7 million Pacific Women Shaping Pacific Development program, funded by Australia.