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2018 Annual Economic and Financial Review
MONTSERRAT
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76
Eastern Caribbean Central Bank
The net foreign assets (NFA) in the banking
system grew by 4.6 per cent to $309.6m
.
This increase was largely attributable to a
4.1 per cent expansion in the net foreign assets
of commercial banks, which totalled
$174.4m. The rise in net external assets of
commercial bank was fuelled by an increase
of 14.6 per cent in net assets held with
institutions external to the Currency Union.
At the same time, Montserrat’s imputed share
of Central Bank’s reserves grew by
5.3 per cent to $135.2m due to an increase of
their assets.
Liquidity in the banking system remained high
and stable in 2018. The ratio of liquid assets
to total deposits and liquid liabilities was
84.6 per cent well above the minimum
prudential benchmark of 25.0 per cent. The
surplus liquidity condition is further evidenced
by a ratio of loans and advances to total
deposit of 29.0 per cent at the end of the
review period, below the prudential guidelines
of 75.0 per cent to 85.0 per cent. The ratio of
non-performing loans to gross loans fell to
4.9 per cent from 5.7 per cent, below the
ECCB’s recommended limit of 5 per cent.
External Sector Developments
The merchandise trade deficit totalled
$77.3m (46.0 per cent of GDP) in 2018,
compared with a deficit of $66.0m
(40.8 per cent of GDP) in 2017.
This expansion of the trade deficit resulted
from an increase of 12.3 per cent in the import
bill, coupled with a 7.9 per cent reduction in
the export earnings. The larger import bill
was primarily influenced by higher payments
for the imports of mineral fuels and related
materials, manufactured goods, and
miscellaneous manufactured articles. Export
earnings decreased by $1.3m to $14.7m due
to a 14.4 per cent ($2.0m) reduction in
domestic exports. The main categories that
contributed to the decline in domestic exports