Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

ANGUILLA

in deposits was largely attributable to the drawdown of the CDB recapitalisation loan, which was held in escrow at the Central Bank. Commercial bank credit to the central government increased by 25.7 per cent ($2.8m), while credit extended by the Central Bank declined by 23.3 per cent ($3.5m) due to ongoing amortisation. An analysis of changes in the distribution of credit indicates contraction across most sectors. Some of the key areas which recorded a decrease in credit include construction and land development ($19.8m), personal ($17.5m) and distributive trade ($2.5m). Within the personal sector, credit for the acquisition of property contracted by $13.1m to $164.2m, while credit for “other personal”, which includes items such as education loans, retreated by $3.9m to $167.6m. Despite the overall contraction, credit expanded to tourism ($5.5m), government and statutory bodies ($3.2m) and professional and other services ($1.0m). The net foreign assets of the banking system rose by 10.3 per cent to $544.8m compared with an increase of 14.3 per cent to $494.0m during 2017. The outturn was primarily driven by a 43.3 per cent increase ($139.4m)

moderated by a 1.6 per cent ($1.5m) decline in private sector time deposits. In respect of narrow money, currency with the public and private sector demand deposits increased by 12.8 per cent ($2.9m) and 3.9 per cent ($1.9m) respectively, while EC$ cheques and draft issued contracted by 88.1 per cent ($2.2m). Domestic credit contracted by 1.5 per cent to $533.3m, in contrast to growth of 1.8 per cent to $541.5m during 2017. This development was largely attributable to a 4.7 per cent ($31.7m) reduction in outstanding credit to the private sector. Credit to both households and businesses declined by 4.6 per cent ($16.6m) and 5.1 per cent ($15.3m) respectively, during the review period. The decline in domestic credit was also influenced by 26.4 per cent ($14.5m) increase in the net deposit position of non- financial public enterprises, largely reflecting an increase in their deposits at commercial banks. By contrast, the net deposit position of the central government fell by 51.5 per cent ($37.9m) to $35.7m, largely due to a decline in deposits at the central bank ($59.4m) to $0.1m . This decline was partially offset by a $20.7m increase in central government deposits at commercial banks. The reduction

______________________________________________________________________________ 27 Eastern Caribbean Central Bank