2020 Annual Economic and Financial Review

2020 Annual Economic and Financial Review

MONTSERRAT

year’s $136.8m (75.3 per cent of GDP) and dominated by higher spending on goods and services (13.8 per cent).

reflected a reduction of 32.9 per cent in the outstanding debt of public corporations, while central government debt increased marginally by 1.5 per cent to $8.8m. Banking Sector Developments Consistent with the contraction in economic activity, broad money liabilities (M2) fell by 5.5 per cent to $251.9m (146.4 per cent of GDP), contrasting a marginal gain to $266.5m (149.7 per cent of GDP) during 2019. The decline in monetary liabilities was driven by a 32.1 per cent ($20.5m) drop in demand deposits, which was partially offset by gains in both foreign currency deposits (6.4 per cent) and savings deposits (1.5 per cent). Similarly, domestic credit contracted by 63.2 per cent ($11.9m) as the net deposit position of the central government increased. By contrast, the net foreign assets of the banking system increased by 10.0 per cent to $338.1m at the end of 2020, primarily due to growth in Montserrat’s imputed reserves at the Central Bank.

Montserrat Public Finance (EC$M)

200.0

150.0

100.0

50.0

0.0

(50.0)

(100.0)

2016

2017

2018

2019

2020

Current Revenue

Current Expenditure

Current Balance (before grants)

Capital Expenditure

Grant inflows from both the United Kingdom and the European Union increased by $29.0m in 2020. In similar fashion, capital expenditure rose by 71.7 per cent to $27.1m (16.2 per cent of GDP), as public sector investments were targeted towards the subsea fibre optic project, the AO1 road improvement project, the resurfacing of the John A Osborne airstrip, and the 750kW solar photovoltaic microgrid project, among others. The total disbursed outstanding public sector debt decreased by 7.1 per cent to $10.8m (6.3 per cent of GDP), down from 6.4 per cent one year earlier. This development

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