Economic and Financial Review - June 2019

June 2019 Economic and Financial Review SAINT VINCENT AND THE GRENADINES

a turnaround in the growth of quasi money which rose by 7.2 per cent to $1,124.5m, following a 0.5 per cent decrease in the same period last year. The increase in quasi money was influenced by a 4.9 per cent advance in private sector savings; the largest sub-component, combined with expansions in private sector foreign currency deposits (44.8 per cent) and time deposits (1.9 per cent). Meanwhile, narrow money (M1) increased by 0.3 per cent to $517.7m, following a 0.6 per cent expansion during the first half of 2018. The slowdown in the growth rate was largely due to a 27.8 per cent fall in EC$ Cheques and drafts issued, combined with a deceleration in the growth rate of private sector demand deposits to 0.7 per cent. Meanwhile currency with the public advanced by 1.3 per cent to $108.5m. During the review period, domestic credit contracted by 2.4 per cent and totalled $1,081.3m at the end of June 2019, in contrast to a 0.7 per cent rate of decline during the first half of 2018. The decrease was due to a reduction in the net indebtedness of the public sector coupled with a decline in private sector credit. Developments in the public sector reflected a decline in net credit to the central

government, as well as an increase in the net deposit position of non-financial public enterprises. The net indebtedness of the central government declined during the review period at a rate of 12.3 per cent to $93.3m, following a 3.9 per cent decrease in the corresponding period of the previous year. The central government’s lower net debt position reflected 41.1 per cent ($35.1m) growth in government deposits, compared with a more moderate 11.5 per cent ($22.1m) rise in borrowing. Lower private sector credit was influenced by a 1.7 per cent reduction in business credit to $160.1m, in contrast to a 3.5 per cent increase in 2018. A mitigating factor was an increase in lending to households of 0.1 per cent. Meanwhile, the net deposit position of non-financial public enterprises (NFPE’s) rose by 8.2 per cent to $110.1m, attributable to an accumulation of deposits. An analysis of the allocation of bank credit by economic activity revealed that total loans and advances increased by 1.7 per cent to $1,242.8m. The major contributors to this outcome included expansions in credit extended for other purposes (14.3 per cent) and to the manufacturing sector (8.3 per cent). Credit extended for other purposes largely reflected a 22.6 per cent

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Eastern Caribbean Central Bank