Tonga closed out 2025 with a mix of steady domestic progress and emerging external pressures. Developments across fuel supply, banking, agribusiness and export infrastructure pointed to a gradual strengthening of the productive economy, even as global energy costs and financing constraints continued to shape business conditions. At the same time, new United States entry restrictions on Tongan citizens introduced an unexpected diplomatic and economic variable, underscoring how external policy shifts can quickly intersect with local commercial and community interests.
Lord Fakafanua (Photo courtesy Radio New Zealand website.)
These developments are unfolding against the backdrop of a newly formed government led by Prime Minister Fatafehi Fakafānua, since 18 December 2025, following the November general election. The new administration has signalled a pragmatic and economy-focused agenda, with early emphasis on improving access to finance, strengthening agricultural value chains, and addressing infrastructure bottlenecks that directly affect business activity. Ministers have spoken of the need to stabilise essential services, support export-oriented sectors and create a more predictable environment for private investment. For business leaders, the coming months will be closely watched as an early test of whether policy intent translates into implementation, particularly in areas such as SME lending, agribusiness support and external economic engagement.
Fuel supply and prices stabilise after months of shortage
Tonga’s long-running fuel supply disruptions eased in late December, bringing relief to motorists, transport operators and businesses that had been struggling with intermittent supplies for several months. Pacific Energy confirmed that the domestic fuel supply chain returned to normal on 19 December, ending extended shortages that disrupted commerce and daily life across the kingdom. The Government had worked closely with suppliers to ensure regular shipments, particularly ahead of the holiday period when demand spikes.
Despite this improvement, retail petroleum pricing remained a concern for businesses entering 2026. Retail prices for petrol, kerosene and diesel were set to increase from 2 January 2026, as approved by the Tonga Competent Authority, reflecting broader cost pressures in global energy markets and the need to maintain sustainable supply chains.
Cold storage upgrade boosts agricultural exports
Early December saw a milestone for post-harvest infrastructure with the official opening of an upgraded cool storage facility at Nishi Trading in Nuku’alofa. Opened by Crown Prince Tupoutoʻa ʻUlukalala, the facility is expected to maintain crop quality and support export readiness for Tonga’s horticultural producers. The upgrade aligns with longer-term efforts to improve value chains for fresh produce destined for overseas markets.
Credit access eased through bank guarantee agreement
Finance sector developments gained traction on 9 December when Tonga Development Bank (TDB) and the International Finance Corporation (IFC) signed a guarantee agreement to improve lending conditions for small and medium enterprises. The agreement aims to reduce risk for lenders and expand access to credit for productive investments, including equipment and working capital for SMEs — a sector often hampered by limited collateral and cautious credit practices.
Kava packhouse enhances export competitiveness
Agriculture trade also featured in December, with a new packhouse commissioned for Fakatoumafi Kava in Vava’u. The facility enables grading, processing and packaging of kava to export-ready standards and is expected to help meet international demand while capturing more value within Tonga rather than exporting raw produce. This reflects steady progress over recent years toward building processing capacity and enhancing quality compliance for one of Tonga’s key export products.
Tonga faces US travel and visa restrictions
Beyond economic developments, Tongans faced a diplomatic and mobility challenge as United States travel restrictions came into force from 1 January 2026. Under an executive presidential proclamation, visas for short-term visits, tourism and business purposes were suspended or severely limited for Tongan citizens, who now face “partial entry restrictions” alongside a list of other countries cited for documentation, screening and overstay concerns. Tonga stands out as the only Pacific island nation on this list, prompting concern among community leaders and diaspora groups given strong family and business links with the US.
Critics argue that the policy risks disrupting remittances, educational exchanges and business travel, noting that the high rates of Tongans residing in the US have underpinned strong bilateral ties in recent years.
