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.
