Tonga PM calls on China to write-off Pacific debt

Pacific islands nations faced huge bills to rebuild after a category five cyclone slammed into the parts of the region in February AFP/Handout

Chinese aid in the Pacific has ballooned in recent years with much of the funds coming in the form of loans from Beijing's state-run Exim Bank.

Tonga has run-up enormous debts to China, estimated at more than US$100 million by Australia's Lowy Institute think tank, and Pohiva said his country would struggle to repay them.

He said the situation was common in the Oceania region and needed to be addressed at next month's Pacific Island Forum summit in Nauru.

"We need to discuss the issue," he told the Samoa Observer in an interview published on Tuesday.

"All the Pacific Island countries should sign this submission asking the Chinese government to forgive their debts.

"To me, that is the only way we can all move forward, if we just can't pay off our debts."

Tonga took out the Chinese loans to rebuild in the wake of deadly 2006 riots that razed the centre of the capital Nuku'alofa.

Beijing has previously refused to write-off the loans by turning them into aid grants but did give Tonga an amnesty on repayments.

Pohiva said China now wanted the debts repaid.

"By September 2018, we anticipate to pay US$14 million, which cuts away a huge part of our budget," he said.

Tonga's ability to pay has been further dented this year by another massive rebuilding effort in Nuku'alofa, this time after a category five cyclone slammed into the capital in February.

"If we fail to pay, the Chinese may come and take our assets, which are our buildings," Pohiva said.

"That is why the only option is to sign a submission asking the Chinese government to forgive our debts."

His comments come as Australia and New Zealand ramp up aid efforts in the Pacific to counter China's growing presence in the region.

Australia has raised fears in recent months Pacific nations' debts to China leaves them susceptible to Beijing's influence.

It has resulted in a race to win hearts and minds in the region.

Canberra recently announced plans to negotiate a security treaty with Vanuatu, while also funding and building an underseas communications cable to the Solomon Islands and Papua New Guinea.

Meanwhile, Chinese company Huawei has agreed to build PNG's domestic internet network with funds supplied by Exim Bank.