Tonga’s new Foreign Exchange Control Act gives it the power to ensure regulations are followed and that foreign exchange due to Tonga is repatriated, according to the Reserve Bank.
The Bank said that under existing laws, there was no regulation ensuring that when the level of foreign reserves was low and unable to meet Tonga’s overseas payment obligations, the proceeds of exported commodities or overseas payments by tourists came back to the kingdom.
The new Act would also allow the Bank to impose limits on foreign exchange dealers’ exchange rate spreads.
There was no level playing field in complying with the exchange control requirements or on enforcing these requirements on banks and foreign exchange dealers such as money transfer operators, the Bank said.
In other changes, the new act means all exports of goods and services from Tonga must be declared to the Reserve Bank.
The Reserve Bank now has the power to impose requirements to repatriate any gold or foreign exchange due to anybody living from exports or offshore investments.
The Reserve Bank can set limits on how much foreign exchange or gold can be held by a resident, or a limit on a resident’s foreign currency account.
Only persons authorised by the Reserve Bank can deal in foreign exchange, foreign securities and gold.
The Reserve Bank now has the power to issue directives and impose penalties on authorised persons for non-compliance with the provisions of the Act.