Government borrowing doubles year on year

via Government borrowing doubles year on year – Treasury | The Source March 14, 2014

Government monthly borrowing doubled in December compared to the previous year as its spending spiked in spite of an underperforming economy, latest Treasury figures have shown.

In contrast, domestic credit marginally declined in December as financial institutions took a conservative lending approach.

“During the month of December, domestic credit declined by 0.55 percent from $4.091 billion to $4.068 billion, indicating the deepening credit crunch in the economy,” said Treasury in its monthly economic report for January.

“On the contrary, loans and advances to Government increased by 103.3 percent from $176.058 million in December 2012 to $357.997 million in December 2013.”

During the period under review, many companies — mainly in the manufacturing sector — closed shop due to funding constraints and use of antiquated equipment and machinery.

Loans and advances to the private sector fell by 1.3 percent to $3.650 billion as at December 31, 2013 compared to $3.698 billion the previous month.

The loans were mainly to the agriculture, distribution, services and manufacturing at 20 percent, 16 percent, 16 percent and 15 percent of the total.

The structure of bank deposits was composed of demand deposits at 49.8 percent, under 30-day deposits were 31.8 percent and over 30 day-deposits at 16.2 percent.

Broad money supply, as measured by total banking sector deposits, stood at $3.932 billion as at December 31, 2013, representing a monthly increase of $125.2 million from the November stock of $3.807 billion.

During the month of December 2013 major deposits into the banking sector came from the financial investments and services sector, contributing 22 percent and 13 percent respectively.