Economic and Financial Review - June 2019

June 2019 Economic and Financial Review THE COMMONWEALTH OF DOMINICA

Capital expenditure rose by $5.9m to $238.4m, associated with reconstruction activity following the passage of hurricane Maria. Other infrastructural improvements such as road works, the dredging of rivers and the construction of housing, which were mostly funded by the Government of The Commonwealth of Dominica, also contributed to the rise in capital expenditure. Concurrently, capital grants amounted to $0.1m, largely unchanged from that recorded in the same period of the previous year. The deficit ($169.9m) was driven by developments on both the current and capital accounts and were mainly financed through funding from domestic sources ($159.2m), as the government drew down on its deposits and contracted loans. Domestic funding mainly came from commercial bank ($87.2m), the Eastern Caribbean Central Bank ($12.2m) and other financing institutions ($59.8m). Total disbursed outstanding debt of the public sector is estimated to have increased by 7.4 per cent to $1,189.5m at the end of June 2019. This outturn resulted from an increase in both central government and public corporations debt. The debt of

central government grew by 8.5 per cent to $1,032.6m, reflecting a 27.3 per cent increase in domestic debt and a 2.4 per cent increase in external debt. The debt of public corporations also expanded by 1.0 per cent to $157.0m, associated with a rise in debt owed to their domestic creditors (6.4 per cent) but partly offset by a decline in their obligations to external creditors (3.0 per cent).

Dominica Public Finance

EC$M

-50.0 0.0 50.0 100.0 150.0 200.0 250.0 300.0

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

Recurrent Revenue Recurrent Expenditure Current Account Balance

Banking Sector Developments Monetary liabilities (M2) fell by 2.7 per cent to $1,607.4m during the first six months of 2019, in contrast with growth of 7.0 per cent during the corresponding period of 2018. The reduction in M2 was driven by decreases in both quasi money, the larger component of M2, and narrow money. Quasi money fell by 1.3 per cent to $1,188.9m, reflecting decline in private sector private sector savings deposits (2.1

45

Eastern Caribbean Central Bank