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2018 Annual Economic and Financial Review
MONTSERRAT
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75
Eastern Caribbean Central Bank
payment of interest by the Montserrat Utilities
Limited on the Caribbean Development Bank
(CDB) loan for the new power plant. Of the
$10.1m total debt, the central government
held $6.8m, while public corporations
accounted for $3.3m.
Banking Sector Developments
In the banking system, monetary liabilities
(M2) increased by 5.4 per cent to $255.9m
during 2018, in contrast to a decline of
1.8 per cent during 2017.
This outturn was largely due to an expansion
of 12.1 per cent in narrow money supply (M1)
to $68.1m. Within this category, private
sector demand deposits grew by 17.0 per cent
($6.7m) and currency with the public
2.0 per cent ($0.4m). Another contributing
factor to growth in M2 was a 3.2 per cent
increase in quasi money to $187.8m, driven
by a 38.1 per cent ($3.4m) and 2.4 per cent
($3.4m) increase in private sector foreign
currency deposits and private sector savings
deposits components.
During the period under review,
commercial banks had a net credit position
of $3.6m, representing a reversal from a net
deposit position of $0.7m in 2017
. This
outcome resulted from the net deposit position
of non-financial public enterprises decreasing
to $9.3m at the end of 2018 from $14.5m as
at end 2017. In addition, private sector
borrowing increased by 5.4 per cent, largely
associated with 7.7 per cent growth in credit
to households. However, this was partially
offset by central government holding more
deposits at commercial banks, which grew by
7.9 per cent in 2018.
An analysis of the distribution of commercial
bank credit by economic activity revealed
personal loans, which accounted for an
estimated 85.9 per cent of credit outstanding,
rose by 5.4 per cent to $89.3m. This
expansion was reflected primarily in growth in
lending of $4.9m to $73.7m for acquisition of
property. Credit to mining and quarrying
increased by 44.8 per cent to $0.5m in 2018.
However, credit extended for construction and
tourism fell by 10.6 per cent to $4.2m and
5.0 per cent to $6.0m respectively 2018.