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2018 Annual Economic and Financial Review ST VINCENT AND THE GRENADINES
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Eastern Caribbean Central Bank
1.7 per cent to $1,565.1m during 2018, when
compared to growth of 1.2 per cent during
2017. The expansion in M2 largely reflected
the growth in narrow money, which was
tempered by a contraction in quasi money.
Narrow money recorded an expansion of
8.4 per cent to $516.0m, reflecting increases
of 11.7 per cent and 7.9 per cent in currency
with the public and private sector demand
deposits respectively. The expansion was
dampened by a 1.3 per cent decline in quasi
money to $1,049.2m, primarily on account of
contractions in foreign currency deposits
(12.2 per cent) and time deposits (4.8 per cent)
of the private sector.
The net credit position of commercial banks
increased by 1.5 per cent to $1,107.3m in
2018 from the prior year’s position of
$1,091.0m
. Contributing to this expansion
was an 11.7 per cent increase in net credit to
government, partially attributable to a
12.9 per cent decline in deposits.
Concurrently, the net deposit position of non-
financial public enterprises fell by 3.2 per cent
to $101.8m, while private sector borrowing
rose by a marginal 0.2 per cent during the
period.
The subdued expansion in private sector credit
was driven largely by outstanding credit to
households, which continued to dominate
credit to the sector. Credit to households grew
at a decelerated rate of 2.3 per cent during the
period, following a rate of 3.7 per cent during
the previous year. Conversely, banking sector
data indicated another year of credit
contraction to the corporate sector, despite the
estimated improvement in economic activity.
Following an 11.2 per cent reduction in 2017,
credit to that sector plunged further by
12.6 per cent, which was reflective of a more
prudent approach to credit underwriting by
some commercial banks and risk aversion by
many small and family-owned businesses.
An analysis of the allocation of bank credit by
economic activity revealed that loans and
advances to the private sector fell by
0.7 per cent to $1,222.7m during 2018,
following the 2.6 per cent expansion recorded
during 2017. This outturn stemmed from
declines in outstanding credit to a number of
the key sectors. Declines were registered in
outstanding credit to tourism (39.9 per cent),
transport (29.9 per cent), manufacturing
(18.3 per cent) and distributive trades
(8.4 per cent). These contractions were
moderated by a 4.8 per cent expansion in
credit extended to construction. Of the non-