2019/20 Budget Communication Final Budget Communication | Page 31

with a reduction in the deposit base. As well, banks’ credit quality indicators continued to improve,
supported by the modest growth of the economy, combined with ongoing debt restructuring
activities and loan write-offs.
External reserves declined by 15.6 percent to a level of $1,196 million in 2018, amid
an increase in private sector foreign currency demand in the latter half of the year and sustained
outflows for public sector-related transactions. Reserves at year-end still represented some 17.5
weeks of total merchandise imports, well above the international benchmark of 12 weeks.
In the first quarter of 2019, both bank liquidity and external reserves expanded,
attributed to the buoyant seasonal foreign currency inflows from tourism activities. At end-March
2019, external reserves stood at $1,392 million, a gain of $194.9 million over the three-month
period, and exceeding the $189.1 million growth experienced in the same period of the previous
year.
Credit quality indicators improved throughout the quarter, as total private sector loan
arrears contracted by $67.4 million and the corresponding arrears ratio declined by 1.1 percentage
points to 13.2 percent.
During the quarter, banks also increased their total provisions for bad debts by 0.5
percent to $440.6 million. As a result, the ratio of total provisions for both arrears and
nonperforming loans firmed to 59.3 percent and 86.4 percent, respectively.
VI.
Fiscal Performance in 2018/19
Mr. Speaker,
I now turn to fiscal developments in the 2018/19 fiscal year.
Performance in the first ten months of the fiscal year—the latest available data—
mirrored a healthy, growing economy throughout 2018. Aggregate revenue increased by $272.6
million or 16.2 percent to $1.9 billion, which outpaced the $160.5 million or 8.4 percent accretion
in total expenditure to $2.1 billion. As a result, the fiscal deficit improved by $112.1 million or
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