2020 Annual Economic and Financial Review

2020 Annual Economic and Financial Review

ST CHRISTOPHER (ST KITTS) AND NEVIS

business

claims

declined

by

External Sector Developments

(4.3 per cent).

Initial estimates indicate that developments on the Balance of Payments resulted in a net borrowing position of $312.2m (12.5 per cent of GDP) at the end of 2020, in contrast to the net lending position of $4.5m (0.2 per cent of GDP) recorded in 2019. This deterioration was mainly driven by an increase in net outflows on the current account. The current account deficit widened to $383.3m from $150.4m, largely reflecting lower inflows from services, as travel services were suspended for most of the year, due to the pandemic.

St Kitts &Nevis Selected Monetary Indicators Annual Percentage Change

100.0 120.0

8.0

6.0

20.0 40.0 60.0 80.0

4.0

2.0

(60.0) (40.0) (20.0) 0.0

0.0

(Money & Credit)

(2.0)

(Net Foreign Assets)

(4.0)

2016

2017

2018

2019

2020

Credit

Money

Net Foreign Assets

Despite the deferral of some loan payments through a support programme implemented by the ECCU Bankers Association with regulatory forbearance by the ECCB, the banking system remained liquid at the end of 2020. The ratio of net liquid assets to total deposits rose by 5.9 percentage points to 57.8 per cent, well above the ECCB’s minimum benchmark of 20.0 per cent. Notwithstanding the high level of liquidity in the banking system, asset quality at financial institutions remained an area of concern. The ratio of nonperforming loans to gross loans stood at 23.5 per cent, 18.5 percentage points above the ECCB’s tolerable limit.

St Kitts &Nevis Balance of Payments (EC$M)

1200.0

1000.0

800.0

600.0

400.0

200.0

0.0

(200.0)

(400.0)

(600.0)

2016

2017

2018

2019

2020

Exports of Goods Imports of Goods Current Balance Net Lending/Net Borrowing

A decline in net inflows on the capital account also contributed to the widening of the Federation’s net borrowing position. On the financial account, a net borrowing position of $193.8m was

38