Tonga wanted a ‘soft loan’

Press, 13 June 1977, Page 2

Tonga wanted a ‘soft loan’

From

CEDRIC MENTIPLAY

Nukualofa j Nukualofa is a spot at which all the financial and economic troubles of the; small emergent nations of! the South Pacific seem, present, as well as some of' the suggested remedies. There were startling stories a few months ago that Tonga would become a “firm base” for the highly mechanised deep-sea fishing fleets' of the Soviet Union — a project which would have/ meant the establishment of! ship-repair and maintenance' facilities, and the improvement of Tonga’s marginal: airport to international stan-' da rds. What is not so widely known is that about six: months ago the Tongan Gov-[ eminent, alarmed about the extent of its economic' troubles, made a formal request to New Zealand for! a grant or "soft loan”! (which is almost the same): of S2M. As might be expected, the! New Zealand financial team was unhappy about such an: arrangement. The New Zealand Govern-' ment is not inclined towards, giving any grant or loan for: what could be termed budgetary support, but prefers a' specific developmental'

undertaking. The Prime Min-i ister (Mr Muldoon) visited! Tonga in January, and prom-j ised to consider the request! in March. In the meantime New Zea-' land's annual aid mission,, 'which included an officer ofj the Treasury’, paid the king-) dom its usual visit. It found! developmental projects held up for lack of funds, and; imade a formal report after j it returned home, the con-1 tents of which are not' : known here. However, local non-Gov-i emment sources have a| ; clear understanding that i (Whatever aid New Zealand! provides will be tied up ini such a way that it will be I safeguarded from being bled joff to support Tonga's failling finances. i Another source says that ,New Zealand will give the I Tongan Government a grant of about 5300.000, condijtional on a high-level review of the Tongan Government’s! [financial and economic pol-l I icy (possibly at New Zea- : land’s expenses by an ex-| ■perienced World Bank' ! official. Tonga’s exterior economic: (position is reasonable — andj strategically the island king-; dom is in an excellent posi-| I tion to support commercial h

[fishing ventures, as well as I back up the Forum Shipping Line — if development is iheaded in the right direction. This is the meaning (behind the comments made lby Mr Muldoon during his ' recent visit to the South l Pacific when he said that (New Zealand was co-oper- : ating with West Germany : and Australia in a project (aimed at boosting Tongan 'skills in ship-repairing and : maintenance. No official figures have been given about the proiject, but it is believed that [its total cost will be ($10,900,000, of which interests in West Germany will [contribute as much as S9M. lit seems, however, that another German enterprise is also connected. This venture will be the establishment of the Shipping Corporation of Polynesia, Ltd, with headquarters at Nukualofa. It will provide a vessel as Tonga’s contribution to the Forum Shipping (Line, but before this will (modernise the inter-island (traffic of the kingdom. Thus Tongans will get the I work opportunities they (need, and the kingdom will (get its chance to become a (maritime nation — though (not under Russian management.