The global recession means remittances sent back to families in Tonga have shrunk by up to 10 per cent, says Tonga's Prime Minister, Feleti Sevele.
Dr Sevele is in New Zealand for a week to discuss with the Government the recession's effect on Tonga.
He said the main impact had
been the fall in revenue from remittances - an important part of Tonga's economy.
The island nation gets about $163 million every year in payments sent by overseas Tongans back to Tonga.
About 85 per cent is from the United States. The revenue is expected to shrink by 7 to 10 per cent this year.
"There has been a decline and it is having an effect, although to date it has not been as drastic as one sees overseas where factories close and people are being laid off. That has yet to happen."
Dr Sevele said Tonga was still better off than many other Pacific nations and there was potential for Tongan people to grow more of the food that was currently imported. "There is a lot more we can do ourselves."
Dr Sevele is due to meet Prime Minister John Key on Tuesday for further talks on the reforms, as well as on the Fijian interim Government's recent suspension from the Pacific Islands Forum. The forum's leaders are due to meet in August to consider Fiji again.
Yesterday Dr Sevele said he believed the Forum needed to "re-look" at its stance on Fiji. Other countries relied on Fiji for trade links and as the headquarters of several important regional institutions.
