Economic and Financial Review - June 2019

June 2019 Economic and Financial Review DOMESTIC ECONOMIC DEVELOPMENTS

first six months of the previous year. The expansion in capital expenditure was driven by growth in five member territories. The largest increases in capital outlays were recorded in Saint Lucia, where expenditure was $33.0m more than the prior year, Saint Christopher (St. Kitts) and Nevis, where capital spending grew by $26.5m and Saint Vincent and the Grenadines, with an increase of $24.6m. Respectively, Anguilla, Antigua and Barbuda and Grenada recorded declines of $1.8m, $4.6m and $6.6m in capital expenditure. Total grant flows fell by 19.0 per cent to $105.8m, compared with a reduction of 5.1 per cent ($7.0m) in the first half of 2018. Declines were noted in capital grant receipts in five territories – Anguilla ($3.9m), Grenada ($4.0m), Montserrat ($4.1m), Saint Christopher (St. Kitts) and Nevis ($4.7m) and Saint Lucia ($7.3m) and also in current grant flows for Montserrat ($7.8m). Consistent with the deteriorated fiscal position, the ECCU recorded an expansion in its total debt stock in the first half of 2019. The total disbursed outstanding public sector debt grew by 0.1 per cent to $13,721.0m. The expansion was attributed to higher indebtedness by the central governments,

which more than offset a decline in the borrowing of public corporations. Central governments’ outstanding debt increased by 0.5 per cent ($61.5m) to $12,107.3m, primarily reflecting growth of 2.0 per cent ($110.3m) in their domestic debt to $5,527.4m, while their external borrowing declined by 0.7 per cent ($48.9m) to $6,579.9. On a country basis, increases were recorded in the total public debt of four member territories - Antigua and Barbuda ($30.9m), The Commonwealth of Dominica ($82.0m), Saint Christopher (St. Kitts) and Nevis ($5.1m) and Saint Vincent and the Grenadines ($42.4m). Public corporations’ indebtedness fell by 3.1 per cent ($52.2m) to $1,613.7m, as a 12.4 per cent ($66.1m) decline in their external debt heavily outweighed growth of 1.2 per cent ($13.9m) in their domestic obligations. Despite the higher debt obligations, central governments’ total debt service payments declined by 3.3 per cent to $809.7m, in contrasts to an increase of 17.3 per cent recorded during the first half of the previous year. The decrease was largely attributable to a 4.0 per cent ($24.0m) decline in principal repayments, which represented 71.5 per cent of total debt servicing. A decline of 1.6 per cent was recorded for

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Eastern Caribbean Central Bank