Economic and Financial Review - June 2019

June 2019 Economic and Financial Review SAINT VINCENT AND THE GRENADINES

increase in credit for public administration. These gains were tempered by lower credit to a number of lending categories. Credit extended for personal use, the category with the largest allocation, decreased by 0.1 per cent reversing a gain of similar magnitude (0.1 per cent) in the first six months of the prior year. Lending for personal reasons was constrained by reductions in credit for miscellaneous personal reasons (3.7 per cent) which offset an increase in credit for the acquisition of property (0.8 per cent). During the first half of the year, credit extended to most of the productive sectors and some key services industries fell. Declines were registered in credit extended to tourism (12.1 per cent), construction (3.4 per cent) and agriculture and fisheries (27.2 per cent). Additionally, lending to the distributive trades sector fell by 1.1 per cent. Net foreign assets of the banking system rose by 21.4 per cent to $727.5m during the six months ending June 2019, in contrast to a 1.6 per cent decline one year earlier. The increase mainly stemmed from net foreign assets of commercial banks which rose by 47.8 per cent to $213.1m, combined with an expansion in Saint Vincent and the Grenadines’ imputed share of the Central

Bank’s reserves by 13.1 per cent to $514.4m. Higher commercial banks net foreign assets was largely driven by a 32.8 per cent increase in assets held in financial institutions outside of the Currency Union and a 4.4 per cent rise in assets held in similar institutions within ECCB territories. Meanwhile, the expansion in Saint Vincent and the Grenadines’ imputed share of the Central Bank’s reserves was fuelled by a 9.3 per cent increase in imputed assets and a 38.2 reduction in imputed liabilities.

St Vincent & the Grenadines Monetary Survey Percentage Change

(M2) %

(NFA)%

10.0

15.0

10.0

5.0

5.0

0.0

0.0

-5.0

-5.0

-10.0

-10.0

17 Q3

15 Q4

16 Q1

16 Q2

16 Q3

16 Q4

17 Q1

17 Q2

17 Q4

18 Q1

18 Q2

18 Q3

18 Q4

19 Q1

19 Q2

Money Supply (M2)

Net Foreign Assets

Liquidity of the commercial banking sector improved marginally during the first six months of 2018, accordingly the system remain very liquid. The ratio of liquid assets to total deposits plus liquid liabilities stood at a rate of 46.0 per cent at the end of June 2018, 2.9 percentage points higher than the rate at the end of December 2018, this far exceeded the prudential range of 20.0 to

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Eastern Caribbean Central Bank