2020 Annual Economic and Financial Review

2020 Annual Economic and Financial Review

COMMONWEALTH OF DOMINICA

An analysis of the distribution of commercial bank credit by economic activity revealed that total loans and advances was $1.1b at the end of 2020, driven by increased lending to manufacturing, construction and land development, government and statutory bodies and private households. Although the pandemic adversely affected the economy of the Commonwealth of Dominica, the banking sector remained liquid. The ratio of net liquid assets to total deposits rose by 4.2 percentage points to 52.1 per cent, well above the ECCB’s minimum benchmark of 20.0 per cent. The ratio of nonperforming loans to gross loans stood at 15.0 per cent, 10.0 percentage points above the ECCB’s tolerable limit. External Sector Developments Preliminary estimates of the balance of payments indicate a reduction of the net borrowing position to $246.2m (19.5 per cent of GDP) in 2020, below that of $469.4m (30.3 per cent of GDP) recorded in 2019. This development was driven by a decrease in net outflows on the current account to $375.0m from $600.8m in the previous year, reflecting a decline in net outflows from imports, as

well as lower inflows from services, as travel was negatively affected by the pandemic.

Dominica Balance of Payments (EC$M)

1000.0

800.0

600.0

400.0

200.0

0.0

(200.0)

(400.0)

(600.0)

(800.0)

2016

2017

2018

2019

2020

Exports of Goods

Imports of Goods

Current Balance Net Lending/Net Borrowing

There was also a slight decline in net inflows on the capital account during the review period. On the financial account, a net borrowing position of $167.3m was recorded, compared with one of $614.5m observed in 2019. Outlook Economic activity in Dominica is projected to accelerate in 2021, based on anticipated positive developments in key sectors, as the country recovers from the impact of COVID-19.

The is expected to expand with ongoing reconstruction and rehabilitation work in the public sector and the advancement of private sector projects, such as the Citizenship by Investment funded construction sector

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