Economic and Financial Review - June 2019

June 2019 Economic and Financial Review MONTSERRAT

Current expenditure increased by 1.4 per cent to $66.7m, as growth in personal emoluments and goods and services more than offset a decline in transfers and subsidies. Spending on personal emoluments grew by 5.0 per cent ($1.1m) to $23.3m, predominantly driven by higher salaries paid to public officers. Expenditure on goods and services increased by 4.3 per cent ($1.1m) to $26.0m compared with growth of 8.8 per cent in the first half of the previous year. The interest payments sub-category recorded a marginal increase ($0.1m), as external debt rose. By contrast, outlays on transfers and subsidies declined by 7.2 per cent ($1.4m) in the review period. Capital expenditure grew by 19.9 per cent ($1.3m) to $8.1m in the review period compared with growth of 10.3 per cent in the corresponding half of 2018. The increase in capital expenditure was primarily due to repairs to infrastructure, mainly roads and bridges. Preliminary data for the period ended June 2019 indicate that the total disbursed outstanding debt of the public sector stood at $12.0m, a decline of 2.6 per cent from the total at the end of December 2018. This

outturn largely reflected declines of 5.8 per cent and 1.4 per cent in the borrowing of public corporations and central government, respectively. The stock of public sector external debt stood at $6.8m at 30 June 2019, compared with a balance of $9.0m recorded at the end of December last year, as repayment on the loan facility for the power plant continued. The decline in the total outstanding debt of the central government was mainly due to a fall of 7.1 per cent ($0.2m) in their stock of domestic debt. Banking Sector Developments In the banking system, monetary liabilities (M2) are estimated to have expanded by 1.0 per cent to $258.4m during the first six months of 2019, in comparison with growth of 2.5 per cent during the corresponding period of 2018. The expansion in M2 largely reflected developments in Money Supply (M1). M1 grew by 18.2 per cent to $80.5m, driven mainly by growth in private sector demand deposits (21.5 per cent) and currency with the public (13.1 per cent). The expansion in M1 was tempered by a 5.3 per cent fall in quasi money to $177.9m, attributable to declines in private sector time deposits (38.2 per cent) and private sector savings deposits (1.1 per cent). These

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Eastern Caribbean Central Bank