2020 Annual Economic and Financial Review

2020 Annual Economic and Financial Review

SAINT VINCENT AND THE GRENADINES

the central government (68.9 per cent). Banks remained highly liquid as evidenced by a net liquid asset to total deposits ratio of 47.7 per cent at the end of December 2020, above the ECCB’s stipulated guideline of not less than 20.0 per cent. Non-performing loans to gross loans rose to 7.4 per cent, after gradually converging towards the ECCB’s prescribed ceiling of 5.0 per cent over the previous three years. External Sector Developments A net borrowing position of $334.4m (17.6 per cent of GDP) was estimated on the Balance of Payments at the end of 2020, compared with one of $154.5m (6.9 per cent of GDP) in 2019. This outturn was attributable to an increase in outflows on the current account which recorded a deficit of $384.4m compared with a smaller imbalance of $215.9m in the previous year. This widening mainly reflected reductions in inflows from services as travel services were adversely impacted by the COVID-19 pandemic, which brought the tourism industry to a virtual halt.

St Vincent & the Grenadines Balance of Payments (EC$M)

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

Lower net inflows on the capital account also helped increase the net borrowing position of Saint Vincent and the Grenadines. On the financial account, a net borrowing position of $202.6m was recorded, compared with one of $55.1m observed in 2019, largely attributable to a net outflow of other investments. Outlook The socioeconomic developments associated with the explosive eruption of the La Soufriere Volcano have significantly hampered the economic prospects of Saint Vincent and the Grenadines. The subsequent contraction in activity in the key sectors will have grave implications for the overall economy going forward. The fallout will not only be reflected in depressed real sector developments, but also in a deterioration of public finances.

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