Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

DOMESTIC ECONOMIC DEVELOPMENTS

$1,284.1m, from taxes on international trade and transactions, largely driven by higher yields from the import duty and the customs service charge, associated with the increased economic activity. Receipts from taxes on income and profits grew by 2.8 per cent ($24.1m), buoyed by higher yields from the corporation tax (3.8 per cent), which more than offset a decline in proceeds from the personal income tax (2.0 per cent). On a disaggregated basis, all countries, except Anguilla, recorded growth in tax revenue ranging from 0.8 per cent in St Vincent and the Grenadines to 22.6 per cent in Dominica. Current expenditure expanded by 7.2 per cent to $4,684.9 (22.7 per cent of GDP), compared with growth of 5.2 per cent to $4,370.3m (22.9 per cent of GDP) in the prior year. Despite growth in current spending, the total remained within the Monetary Council’s target range of 22 to 26 per cent of GDP. The upward movement in current outlays was associated with higher spending on all sub- categories of expenditure, particularly goods and services and personal emoluments.

category of expenditure rose by $72.4m (Saint Lucia), $67.9m (St Kitts and Nevis) and $36.3m (Dominica). Spending on personal emoluments rose by 5.8 per cent ($108.4m) driven by higher outlays in seven of the eight countries, i.e. Antigua and Barbuda ($90.6m), St Kitts and Nevis ($13.8m), Grenada ($7.9m), St Vincent and the Grenadines ($7.2m), Anguilla ($2.1m), Saint Lucia ($4.0m), and Montserrat ($1.0m). By contrast, payments towards personal emoluments fell by 11.2 per cent ($20.1m) in Dominica. Spending on transfers and subsidies rose by 2.8 per cent ($32.0m), influenced largely by increases in subventions and contributions to statutory corporations and other institutions by the governments of Anguilla, Dominica, Grenada, Montserrat, St Kitts and Nevis, Saint Lucia and St Vincent and the Grenadines. The overall increase in spending on transfers and subsidies was moderated by a decline in outlays in Antigua and Barbuda as the government scaled back on transfers to state owned enterprises. Larger interest payments ($7.5m) were attributable to increases in the stock of outstanding public debt, as governments continued to borrow to finance their operations. Higher allocations towards

Outlays on goods and services increased by 18.5 per cent ($166.9m), mainly driven by developments in three countries, where that

______________________________________________________________________________ 9 Eastern Caribbean Central Bank