Tongan Pa'anga

Overview

The Pa’anga is the currency of the Tonga and is governed by the National Reserve Bank of Tonga. The Pa’anga is not convertible and is pegged to a basket of currencies including the Australian Dollar, New Zealand Dollar, US Dollar, and the Japanese Yen.

Economy

• The manufacturing sector of Tonga consists of handicrafts and a few other small-scale industries, all of which account for only about 3% of GDP.
• Commercial business activities also are on a small scale and are dominated to a large extent by the same large trading companies found throughout the South Pacific.
• Tonga’s economy is characterized by a large no monetary sector and a heavy dependence on remittances from the half of the country's population that lives abroad, chiefly in Australia, New Zealand, and the United States.
• Much of the monetary sector of the economy is dominated, if not owned, by the royal family and nobles. This is especially true of the telecommunications and satellite services.
• Most of the small business activity, particularly retailing on Tongatapu, is now dominated by recent Chinese immigrants who arrived under a cash-for-passports scheme that ended in 1998.

History

• The Pa’anga was introduced on April 3, 1967. It replaced the Pound at a rate of 2 Pa’anga = 1 Pound.
• In September, 1974, the country's first commercial trading bank, the Bank of Tonga, opened.
• Until February 11, 1991 the Pa’anga was pegged to the Australian Dollar at par. Since then, it has been pegged to a basket of currencies and has steadily declined.