Tonga will start repaying its Chinese loan of TP$266 million to China’s Export-Import (EXIM) Bank to pay for the rebuilding of Nuku’alofa after riots in 2006.
The repayment comes after the Tonga National Reserve Bank warned in April that it could affect the positive status of foreign aid and higher levels of remittance.
In his report Bank Governor Dr Sione Ngongo Kioa said “foreign aid and higher levels of remittance meant levels of foreign reserves would remain at comfortable levels.
The Bank warned that this would be offset by the beginning of the government’s repayment of the principal loan to China’s Export-Import Bank.”
Prime Minister ‘Akilisi Pōhiva said the government has so far paid around $16 million (US$6.9 million) in interest.
“Our journey now into future is that we would keep on asking China to divert this loan into a grant,” he said.
In September 2013, former Prime Minister Lord Tu’ivakano told parliament they received a letter from the People’s Republic of China regarding Tonga’s request to defer its loan repayment scheduled to start on September 21, 2013 for 10 years.
He said “in their interpretation, China has approved Tonga’s request” although the Chinese authority said at the time they have yet to confirm it.
In 2015 in a meeting in Auckland Hon Pōhiva has warned that China will not forgive the debt.