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2018 Annual Economic and Financial Review
ANGUILLA
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31
Eastern Caribbean Central Bank
Despite the positive growth projections for
Anguilla, key downside risks persist, which
could negatively impact the outlook.
Chief
among these is the possibility of a no-deal
withdrawal of the United Kingdom from the
European Union and what this may portend
for critical aid to Anguilla’s capital
reconstruction programme. Closely aligned is
the potential effect of Brexit on the British
pound, which could negatively affect the
purchasing power of UK travellers.
Additionally, uncertainty associated with
Brexit creates concerns about the future
relationship between Anguilla and St Maarten,
the main access point to the island. A hard
Brexit could potentially complicate access
issues between the British Overseas Territory
and St Maarten, which will remain a part of
the European Union by virtue of being a
dependent of the Netherlands. Looking
further afield, a faster-than-expected
slowdown in the US economy, further
aggravated by a possible escalation in trade
tensions between the United States of America
and China, could dampen global growth and
negatively impact the demand for leisure
among travellers in key source markets.
Another area of concern is the potential non-
divestiture of ANGLEC shares. The use of the
funds from the sale of these shares to pay off
maturing debt obligations is a key component
of the medium term fiscal framework and debt
strategy. Non-divestiture of those shares could
therefore pose liquidity issues for the central
government and impair its ability to honour
maturing debt obligations. Financial stability
issues also continue to present some
challenges
for
the
authorities.
Non-performing loans in the banking system
have increased over the past year and may
require additional provisioning from banks,
which could negatively affect liquidity and
profitability levels. Such a development could
trigger further tightening in lending terms and
conditions, thus making it more difficult for
firms and households to access credit.