Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

MONTSERRAT

payment of interest by the Montserrat Utilities Limited on the Caribbean Development Bank (CDB) loan for the new power plant. Of the $10.1m total debt, the central government held $6.8m, while public corporations accounted for $3.3m.

currency deposits and private sector savings deposits components.

During the period under review, commercial banks had a net credit position of $3.6m, representing a reversal from a net deposit position of $0.7m in 2017 . This outcome resulted from the net deposit position of non-financial public enterprises decreasing to $9.3m at the end of 2018 from $14.5m as at end 2017. In addition, private sector borrowing increased by 5.4 per cent, largely associated with 7.7 per cent growth in credit to households. However, this was partially offset by central government holding more deposits at commercial banks, which grew by 7.9 per cent in 2018. An analysis of the distribution of commercial bank credit by economic activity revealed personal loans, which accounted for an estimated 85.9 per cent of credit outstanding, rose by 5.4 per cent to $89.3m. This expansion was reflected primarily in growth in lending of $4.9m to $73.7m for acquisition of property. Credit to mining and quarrying increased by 44.8 per cent to $0.5m in 2018. However, credit extended for construction and tourism fell by 10.6 per cent to $4.2m and 5.0 per cent to $6.0m respectively 2018.

Banking Sector Developments

In the banking system, monetary liabilities (M2) increased by 5.4 per cent to $255.9m during 2018, in contrast to a decline of 1.8 per cent during 2017.

This outturn was largely due to an expansion of 12.1 per cent in narrow money supply (M1) to $68.1m. Within this category, private sector demand deposits grew by 17.0 per cent ($6.7m) and currency with the public 2.0 per cent ($0.4m). Another contributing factor to growth in M2 was a 3.2 per cent increase in quasi money to $187.8m, driven by a 38.1 per cent ($3.4m) and 2.4 per cent ($3.4m) increase in private sector foreign

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