The fallout from the global financial crisis is still being felt in Tonga, where the economy remains weak, says the Minister for Finance, Sunia Fili.
Ministry figures predict that this year the economy will contract for the third year in a row.
A signicant drop in agricultural export earnings is also being blamed for the weak economy.
Another government minister claims widespread corruption and mismanagement is causing most state enterprises to lose money.
The Minister for Public Enterprises and Revenue, Clive Edwards, says of the 13 state enterprises, seven are operating at a loss.
He said it is hard to track where money is being spent, because most of those businesses fail to keep accurate records.
Mr Edwards says one of the most glaring cases is that of Tonga Timber.
“Tonga Timber has a debt of over $350,000,” he said.
“There are debts owing to that company of over half a million dollars and those debts are not documented properly and that’s what I call improper management.
“It smells of dishonest management.”