Central Bank Governor John Rolle says that the economy’s strengthening enabled higher employment, but unfortunately; not impressive enough to reduce the unemployment rate.
He said, “this is an important indicator concerning the health of the lending environment and prospects around the speed of non-performing loans reduction.”
He added, “International fuel prices rose through most of 2018, but closed lower to December. Whether this also moderated the year-long trend in the fuel surcharge is not yet known as the electricity price data is not yet available.”
Mr. Rolle was giving his first quarterly economic briefing yesterday.
However, the governor said preliminary exchange control data revealed that the hike in prices did not contribute to any increase in the total oil bill for 2018.
He added that both the fuel surcharge and the recent increase in Value Added Tax last year caused an elevated consumer price inflation through September compared with the same period in 2017.
Mr. Rolle said, “in public finances, the reduction in the fiscal deficit was evident during the first half of the fiscal year. However, the relative switch to domestic financing through the banking system and at least one public entity’s swapping of foreign currency to local currency has caused a larger seasonal decline in bank liquidity thank normal during the final month of the year.
“External reserves followed the same pattern ending both December and 2018 lower near $1.2 billion.”, he added.
He said the Central Bank, however, anticipated the outcome, as the public sector largely drew down on liquidity created in 2017 through the external borrowing which occurred.
He added, “the country’s Reserves, however, remains at healthy levels and continues to experience a net positive contribution from the private sector in 2018.
“Beyond the expansion and credit to the public sector, commercial bank lending to the private sector contracted again in 2018, even though at a moderated pace. This was across mortgages, consumer lending, and commercial loans.”, he said.
