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2018 Annual Economic and Financial Review ST KITTS AND NEVIS
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Eastern Caribbean Central Bank
construction and tourism. Lending for other
purposes rose by 19.8 per cent to $421.8m,
largely influenced by a more than fourteen-
fold increase in credit for utilities, electricity
and water, and public administration
(7.8 per cent). Increases in outstanding credit
were also fuelled by larger allocations to
distributive trades (17.1 per cent), personal
uses (1.1 per cent) and manufacturing and
mining and quarrying (8.2 per cent). By
contrast, there were decreases in credit to
other sectors including construction and
tourism of 5.0 per cent and 1.5 per cent
respectively.
The net foreign assets of the banking system
declined by 0.9 per cent to $2,374.4m in
2018, in contrast to an increase of
10.6 per cent ($229.1m) to $2,396.1m in
2017.
The decrease in the net foreign assets
position reflected a 1.2 per cent ($17.3m)
decline in commercial bank’s net foreign
assets to $1,415.0m. This development was
attributable to an increase of 37.9 per cent
($286.8m) in liabilities held by financial
institutions outside of the Currency Union.
Additionally, a decline in the St Kitts and
Nevis’ imputed share of the Central Bank’s
reserves, by 0.5 per cent ($4.5m) also
contributed to the lower net foreign assets
position.
Liquidity in the commercial banking system
increased as evidenced by a rise in the ratio of
liquid assets to total deposits by
7.0 percentage points to 100.4 per cent.
Further supporting evidence of a general
increase in liquidity included the ratio of liquid
assets to total deposits plus liquid liabilities
which rose by 0.7 percentage points to
66.6 per cent. The increase in liquidity was
however, moderated by the upward movement
in the ratio of loans and advances to total
deposits by 1.3 per cent to 41.1 per cent at end
of 2018. Meanwhile, the level of non-
performing loans in the commercial banking
system rose by 4.2 percentage points to
24.7 per cent, compared with a 5.8 per cent
increase in 2017.
External Sector Developments
A deficit of $744.3m (26.5 per cent of GDP)
was recorded on the visible trade account,
above an imbalance of $698.3m (26.1 per
cent of GDP) in 2017, as the expansion in
imports outpaced an increase in exports.