Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

MONTSERRAT

hike in spending on goods and services to $50.1m, as the government reconciled and brought up to date most of its contributions for regional obligations. The spending on this line item accounted for 38.6 per cent of current expenditure in 2018. Additionally, there was an increase in outlays for transfer and subsidies of 16.4 per cent ($4.9m) to $35.1m, as the ferry service had normal operations during the year along with an increase in Medivacs 9 . Outlays on personal emoluments went up by 2.4 per cent ($1.0m) to $44.6m in 2018. Current revenue rose by 6.9 per cent to $50.3m (30.0 per cent of GDP), compared with an increase of 0.1 per cent to $47.1m (28.4 per cent of GDP) in 2017. This development was largely because of an increase in tax revenue, which rose by 7.1 per cent to $44.4m (26.5 per cent of GDP). The main driver of the increase in tax revenue was the higher collections from taxes on income of $1.4m, largely because of a $0.4m uptake in personal income tax. Other categories also recorded an increase in tax receipts, in particular international trade and transaction ($1.0m) and domestic goods and

services ($0.6m). The growth in tax revenue was partly offset by a decline in receipts from taxes on property ($0.04m).

Current grants receipts rose by 2.0 per cent to $78.0m (46.4 per cent of GDP) compared with inflows of $76.5m (47.2 per cent of GDP) in 2017, due to increased external financial support for recurrent expenditure from the United Kingdom. However, total grant receipts contracted to $82.1m, stemming from a 72.6 per cent decline in capital grants to $4.1m in 2018. Capital expenditure fell by 16.8 per cent to $13.4m (8.0 per cent of GDP) in 2018, compared with $16.1m (10.0 per cent of GDP) in the prior year. This fall in capital expenditure is directly related to delays in the implementation of various public sector infrastructural projects. The stock of public sector external debt stood at $10.1m (6.3 per cent of GDP) at the end of December 2018, compared with a balance of $10.5m (6.5 per cent of GDP) recorded at the end of December 2017. The decrease in debt stock is attributable to the

9 Medivacs is a social programme in the Ministry of Health that pays for medical emergencies for citizen who have to be flown out of Montserrat.

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