Economic and Financial Review - June 2019

June 2019 Economic and Financial Review MONTSERRAT

declines outweighed growth of 24.4 per cent in private sector foreign currency deposits.

property, mainly for house and land purchase. There were marginal declines in lending for tourism ($0.1m) and manufacturing and mining and quarry ($0.1m). The net foreign assets (NFA) in the banking system declined by 3.2 per cent to $299.9m. This outturn was largely attributable to a reduction of 4.3 per cent to $167.0m in the net foreign assets of commercial banks. The decline in net external assets of commercial banks was driven by a 20.1 per cent ($8.6m) decrease in net assets held with institutions within the Currency Union. Foreign liabilities held outside and within the ECCU both contracted by 2.3 per cent. The decline in NFA was also influenced by a 1.7 per cent ($2.3m) fall to $132.9m in Montserrat’s imputed share of the Central Bank’s reserves.

The stock of domestic credit position stood at $16.8m at the end of review period, compared with a total of $3.6 at the end of December 2018. This outturn mainly reflected central government’s transaction activities, as private sector credit inched downward. The transactions of the central government resulted in a smaller net deposit position, influenced primarily by a 19.4 per cent ($13.5m) fall in deposits held at commercial banks. Private sector borrowing fell by 0.2 per cent ($0.2m) as a result of a decline in lending to households while loans to businesses increased by 1.1 per cent ($0.1m). The net deposit position of non-financial public enterprises increased by 7.4 per cent to $9.9m. An analysis of the distribution of credit by economic activity suggests that outstanding loans and advances grew by 0.7 per cent, largely associated with an increase in lending for personal uses. Personal loans, which accounted for an estimated 86.2 per cent of outstanding credit, rose by 1.0 per cent to $90.2m. This upturn was reflected primarily in a 1.7 per cent increase to $75.0m in lending for acquisition of

Montserrat Monetary Survey Percentage Change

(M2) %

(NFA)%

10.0

0.0 2.0 4.0 6.0 8.0

5.0

0.0

-10.0 -8.0 -6.0 -4.0 -2.0

-5.0

-10.0

17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 18 Q3 18 Q4 19 Q1 19 Q2

Money Supply (M2)

Net Foreign Assets

67

Eastern Caribbean Central Bank