Prime Minister Lord Fakafanua says government hardship support programmes and subsidised loan initiatives worth $30 million are facing processing delays and weaker uptake, citing stricter eligibility criteria, extensive documentation requirements, and affordability checks.
This funding initiative was introduced by former Prime Minister ‘Aisake Eke to stimulate the growth of the private sector and informal businesses, and to promote long-term economic sustainability.
Lord Fakafanua said the first tranche of $10 million was transferred from the Treasury to the Tonga Development Bank (TDB) in March this year, but to date only $3 million has been disbursed in loans.
He said the government had engaged with the bank and made it clear that the funds should be lent out as intended.
The Fakafanua government is now seeking for the bank to relax its strict lending rules and policies.
The Prime Minister said the government will also step in to support applicants who lack sufficient “collateral” — the assets or property typically required by banks to secure loans.
“The reason Parliament allocated this fund is to support the people and ensure the bank’s policies do not hinder access to borrowing,” Lord Fakafanua said in Tongan.
He revealed that one of the factors delaying loan uptake was applicants’ limited ability to prepare the financial statements required to support their applications.
The Prime Minister said the bank had been reminded that it was its responsibility to assist applicants in preparing these financial statements.
He said this responsibility was a key condition of the agreement between the Treasury and the bank.
The loan initiative was introduced after former Minister of Public Enterprises Piveni Piukala accused the bank of misusing earlier government-backed loan schemes, alleging that funds had been directed toward elites while marginalising low-income small-business owners.
Former bank CEO Emeline Tuita denied the allegations at the time in a statement to Kaniva News.
