28 May 2020 The ongoing debates in parliament on the recurrent deficit Budget (‘Ko Sihova Hoku Tali Tau’anga‘) is a familiar chore that happens in the house before they vote to become a law.
Most of the debates on Wednesday were specifically questions the procurement of the government ‘major road project,‘ particularly what they called the handpicked of the three licensed quarries and the government’s guarantee of their loan with Tonga Development Bank (TDB).
The handpicked of three licensed quarries:
Minister of Finance Hon Tevita Lavemaau told parliament that government already invited all contractors and licensed quarries in Tonga to have an open invitation bid for this ‘major road project.’
Hon Lavemaau said that all bids were too high in comparison to the costing budget of this project which make it unaffordable, hence, the government was unable to proceed.
MP Semisi Sika argued that businesses involved in the opening bids are still waiting for the government’s reply. MP Sika accused the government of how they handled the process of the ‘opening bid’ with different criteria, then handpicked three quarries with other certain criteria.
Hon Lavemaau replied that the government look at the set criteria for this ‘major road project’ and work accordingly. The set criteria have been introduced to parliament by the Honourable Prime Minister Dr Pohiva Tu’i’onetoa such as;
- Quality of work
Hon Lavemaau explored on the set criteria by stating that the contractor(s) (licensed quarry) must not be engaged with other work apart from this major road project from January to December.
The government will not accept any price of more than $70 per single loading truck. The contractor allowed to subcontract the work but the price cannot exceed $70 pa’anga per truck. The timeline of the work must be followed (3 years) in order for the government to accomplish this ‘major road project.’
Government will guarantee the business loan
Minister of Finance told the house that these contractors are allowed to take a loan from the TDB to buy heavy machinery and equipment that suitable for this major road project. Tonga Development Bank required the government to guarantee this private business loan.
MP Mateni Tapueluelu questioned the trustworthy of these private businesses and the kind of guarantee that the government accepted to engage with. MR Semisi Sika asked the Minister of Finance to say yes or no, if the private businesses cannot afford to pay for their loans, should the government pay the rest of the loan?
Hon Lavemaau replied that it is illegal to reveal the name of these contractors in parliament. There is no ‘if’ question, this government has been committed to this project and reassured that it will be successful based on the set criteria. On the other hand, Tonga Development Bank must process the loan with due diligence.
However, TDB required the government to reassure that the contractors for this project must be offered the contract for the terms of the loan (3 years). The payments of the work on this project must be paid directly from the Ministry of Finance to TDB to deduct the loan repayment before releasing the balance to the contractors.
Minister of Finance reminded the house that guarantees a private business loan is not a new concept. The previous government has guarantees two private business loans of $5 million and $10 million.
Guarantee and guarantor
According to the western dictionary, guarantee defined as a formal assurance or promise of certainty. Guarantor defined as helping someone else get credit, such as a loan or mortgage. Acting as a guarantor, you “guarantee” someone else’s loan or mortgage by promising to repay the debt if they can’t afford to.
Minister of Finance told the house that TDB only needs the reassurance of the government (guarantee). Does it mean that the government is not the guarantor of the private business loan? It is understandable that acting as a guarantor is legally enforceable. Can a (third-party) guarantee become legally binding?
The debate on the budget is continuing today in parliament.
FAKAHA ‘EHE MINISITA PA’ANGA ‘I FALEALEA ‘OKU MUIMUI PAU E PULE’ANGA NI KI HE LAO MOE NGAAHI FALE’I MEI HE ‘OFISI ‘ATENI SENIALE
‘Oku kei hokohoko atu pe ngaahi tipeiti ‘i Falealea fekau’aki pea moe Patiseti 2020/21 tautau tefito ‘a e konga lahi e tipeiti ki hono fehu’ia ‘ehe kau Fakafofonga e kakai (MP Misi Sika mo MP Mateni Tapueluelu) ‘a e founga fili koia ‘ehe Pule’anga ‘a e ngaahi kautaha maka ‘e tolu ki he poloseki lahi ki he tanuhala pehe ki hono fakaha koia ‘e malu’i ‘ehe Pule’anga ‘a e ngaahi no taautaha ko ‘eni ‘a e ngaahi pisinisi ni mei he Pangike Fakalakalaka ‘a Tonga ki hono kumi ‘aki ‘enau ngaahi me’angaue ke fakahoko ‘aki e polokalama tanuhala. ‘Oku ‘oatu e tali mei he Minisita Pa’anga moe Palemia pehe ki he ni’ihi ngaahi feme’a’aki fekau’aki moe isiu ko ‘eni. Pea pehe ki he vitio ‘oku ‘oatu ‘i lalo keke lava ‘o fanongo tonu ai.
VPON Media 2020