Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review ST KITTS AND NEVIS

contributed to the lower net foreign assets position.

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

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.

______________________________________________________________________________ 89 Eastern Caribbean Central Bank