The International Monetary Fund has called on Tonga to improve its debt management, and make broader reforms to increase revenue.
Prime Minister's office, Tonga Photo: Supplied
In the IMF's latest state of economy report released this week, Tonga was also encouraged to seek soft loans and grant aid to finance the Pacific Games due to be held in the kingdom in 2019.
Matangi Tonga reported the IMF was satisfied with current policies but urged the National Reserve Bank to improve its framework and supervision over non-banks.
The IMF said private sector development needed to be encouraged, but advised caution should be exercised with government-lending schemes.
Tonga was also advised to develop broader reform strategies to improve the business climate while also improving natural disaster preparedness.
The IMF also warned large increases in spending and cost overruns related to the Pacific Games could weaken fiscal sustainability and increase public debt.
On a positive note, Tonga's economy growth increased an additional 1.6 percent in the 2014/15 year, supported by construction, tourism, strong remittances, and strong private credit growth.