Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

DOMESTIC ECONOMIC DEVELOPMENTS

grew by 4.4 per cent to $1,286.3m. This year’s outturn compares with growth of 12.1 per cent in gross issuance recorded one year ago. Of the total securities, 47 were Treasury bills, while eight were bonds. Notwithstanding the lower volume of bids, the increased value of security issuances augurs well for market confidence in the RGSM and its continued use as a regional investment platform for the governments and people of the ECCU. An analysis of activity by the tenor of the security indicates that the instruments were predominantly of short-term maturity, with Treasury bills making up about 85.5 per cent of the total securities issued. The volume of short dated securities issued contracted by 9.6 per cent and the value fell by 3.2 per cent to $1,073.3m. The lower value was primarily the result of reduced issuance by the governments of Grenada, Saint Lucia, St Vincent and the Grenadines and Dominica. The volume of the longer-term securities (bonds) increased by 14.3 per cent and their value almost doubled to $213.0m. Commercial banks continued to hold the highest proportion of the value of successful bids, which decreased to 37.8 per cent from 45.4 per cent at the end of 2017. Investor

Saint Lucia, St Vincent and the Grenadines, Anguilla and Dominica. This outturn was partially offset by declines in the debt levels of the governments of St Kitts and Nevis, Grenada and Montserrat. The stock of debt by public corporations grew by 3.1 per cent ($49.3m) and primarily reflected growth of 7.3 per cent in domestic obligations, despite a decline of 4.5 per cent in their external commitments. The total debt service payments (principal plus interest) by central governments increased by 37.6 per cent to $1,983.4m (37.7 per cent of current revenue), compared with the volume at the end of December 2017, mainly on account of higher obligations in Saint Lucia, Grenada and St Vincent and the Grenadines. Preliminary data point to a mixed outcome regarding activity on the Regional Government Securities Market (RGSM) during 2018. There was an increase in the value of bids, combined with a simultaneous fall in the volume of issuance on the primary market. Provisionally, the data indicate a decrease in the total number of auctions by member governments to 55 from 59 in the previous year, while the total value of issues Developments on the RGSM

______________________________________________________________________________ 11 Eastern Caribbean Central Bank