CREDIT RATING REPORT

GOVERNMENT OF

August 2013

INSTRUMENTS RATED RATING EC $404.5 Million in Notes and Bonds Cari BBB (Foreign & Local Currency)

Analytical Contacts: RATING DRIVERS Andre Joseph Tel: 1-868-627-8879 Ext. 227 Strengths E-mail: [email protected]

• Monetary and exchange rate stability underpinned by membership in a quasi-currency board arrangement • Relatively diversified economic base Stefan Fortuné Tel: 1-868-627-8879 Ext. 228 • External sector characterized by moderate Balance of Payment E-mail: [email protected] performances and relatively low external debt Website: www.caricris.com

Weakness Disclaimer: CariCRIS has taken due • Continued fiscal pressures resulting from declining revenue and rising care and caution in compilation of data expenditure, leading to rising debt levels for this product. Information has been obtained by CariCRIS from sources which it considers reliable. However, CariCRIS does not guarantee the Rating Sensitivity Factors accuracy, adequacy or completeness of any information and is not responsible • for any errors or omissions or for the Significant changes in the fiscal position results obtained from the use of such • Substantial changes in the debt stock levels information. No part of this report • Significant changes in the external indicators may be published / reproduced in any form without CariCRIS’ prior written approval. CariCRIS is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of this product.

ABOUT THE SOVEREIGN

Saint Lucia, ‘Helen of the West Indies”, is situated in the Eastern Caribbean, at the northern end of the Windward Islands chain. The total area of Saint Lucia is approximately 616 square km (238 square miles). Total population is estimated at 169,115, with the greater number of persons living around the capital, Castries. Average life expectancy is 76.8 years. Infant mortality is estimated at 20.2 deaths per 1,000 live births. The official language is English but French patois is widely spoken.

Tourism is the mainstay of the economy with the main markets being the United States of America (USA), United Kingdom (UK), Caribbean and Canada. Additionally, agriculture, specifically bananas, plays a significant role in the economy. There is a small manufacturing sector, the most diverse in the Eastern Caribbean, producing clothing, beverages, corrugated cardboard boxes, as well as the assembly of electronic components and the processing of lime and coconut. A relatively small financial sector also exists.

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RATING RATIONALE

Caribbean Information and Credit Rating Services Limited (CariCRIS) has assigned the ratings of Cari BBB (local and foreign currency) on its regional scale to the EC $404.5 Million Debt Programme consisting of Notes and Bonds of the Government of Saint Lucia . These ratings indicate that the level of creditworthiness of the instruments in this debt programme, adjudged in relation to other obligations in the Caribbean 1 is adequate.

The ratings are supported by:

Monetary and exchange rate stability underpinned by membership in a quasi-currency board arrangement

As a quasi-currency board, the Eastern Caribbean Central Bank (ECCB) has adopted a number of operating parameters which have served to limit exchange rate uncertainty and foster macroeconomic stability. The ECCB maintains external reserves at a level that is at least 60% of its monetary liabilities, and can make temporary advances to member governments amounting to a maximum of 5% of the government’s average annual current revenue. The holdings in any one government’s treasury bills cannot exceed 10% of the estimated current revenue of that government, and holdings of other government securities may not exceed 15% of currency in circulation and other demand liabilities. Relative to its Caribbean counterparts, the ECCB enjoys a greater degree of political independence.

The fixed exchange rate peg at EC $2.70 to US $1.00, which has been in effect since July 1976, has underpinned price stability, a credible currency and a stable environment conducive to foreign investment and growth. Historically, inflation rates have been low and are among the lowest in the OECS with a 2-year average of 3.5% (2011-2012). However, in 2012 the annual average inflation rose to 4.2% from 2.8% in the prior year. Going forward, CariCRIS expects the inflationary pressures to be curtailed in line with moderation in international crude oil and food prices. The peg to the US dollar resulted in a real effective appreciation of the currency of 5.1% in 2012, indicative of a possible loss in external competitiveness.

1 The term Caribbean as used here covers the following countries: The Bahamas, , Belize, Costa Rica, The Dominican Republic, , Haiti, , Panama, Suriname, and the following countries in the OECS: Anguilla, Antigua & Barbuda, Dominica, Grenada, Montserrat, St. Kitts & Nevis, Saint Lucia and St. Vincent & the Grenadines. Refer www.caricris.com for a more detailed explanation on CariCRIS ratings and rating definitions.

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The financial sector in Saint Lucia is relatively small with 6 commercial banks, 16 credit unions, 26 insurance companies, 7 non-bank financial institutions and 1 development bank. Saint Lucia was a relative late starter in the offshore segment and has only 4 offshore banks. Licenses for both domestic and offshore banks are issued by the Minister of Finance, with the ECCB having sole responsibility for the supervision of the domestic banking sector, whilst the offshore sector is regulated by the Ministry of Finance. In spite of the passage of legislation for the establishment of the Single Regulatory Unit, the commencement of operations has been delayed following the change in government. A new board of directors has been installed and staff is currently being hired. Operations of the unit are expected to begin by the second quarter of 2013.

The financial sector remains broadly sound, despite the challenging macroeconomic environment. Commercial banks remained well capitalized as the capital adequacy ratio stood at 19.2% in 2012, well above the regulatory minimum requirement of 8%. However, non- performing loans (NPLs) to total loans, which have trended upwards since 2007, increased to 15.3% in 2012 from 13.2% in 2011; well above the ECCB’s guideline of 5%. CariCRIS believes the asset quality of banks will continue to deteriorate given the subdued economic activity as well as the high levels of unemployment. The provisioning levels continue to be low, relative to its regional peers, in spite of the rise to 37.9% of NPLs in 2012 from a 5-year low of 23.2% in 2010. Despite sluggish economic activity, credit to the private sector has been on the increase since 2004, increasing by 5.1% in 2012 and with a 3-year average growth of 2.9%. While there were no bank failures in the recent past, in September 2009, the ECCB’s Monetary Council was instrumental in the provision of a resolution for British American Insurance Company Limited (BAICO) operations in the OECS, including Saint Lucia. BAICO's traditional policies were sold to Sagicor Financial Corporation in July 2012. For the executive premium annuities the ECCU has introduced a relief programme, which started in December 2012 and comprises two stages. In the first stage, policyholders with outstanding amounts of up to EC $30,000 will be paid. In the second stage, the liabilities to holders of Executive Flexible Premium Annuities (EFPAs) greater than EC $30,000 will be liquidated. Saint Lucia's own insurance funds, as well as the ECCU-level relief initiatives means that only EC $2 million of BAICO liabilities remain unmatched by assets and a resolution for this is near.

Saint Lucia has limited monetary policy flexibility being a member of the ECCU. A minimum deposit rate of 3% is set by the ECCB whilst the lending rates are market determined contributing to the relatively stable interest rate environment. The deposit rate has averaged 3.1% in the last 3 years while the lending rate has averaged 9%.

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The implementation of most of the recommendations in the IMF’s FSAP report, dated September 2004, has positively impacted the financial sector. As a member of the ECCU, Saint Lucia's financial market infrastructure and legislation is comparable to the rest of the region. Trading on the Eastern Caribbean Stock Exchange (ECSE) occurs twice weekly; however, the market is relatively under-utilized with only 13 equity securities listed. Meanwhile, the Regional Governments Securities Market (RGSM), a regional market for the trading of debt instruments of the member states of the ECCU, operates on a fully electronic platform. As at end of April 2013 the value of outstanding securities on the RGSM was EC $1,789.5 million; Government of Saint Lucia has been the most active on the RGSM accounting for EC $902.5 million or 50.4%. Moreover, a growing percentage of Saint Lucia’s public debt is sourced on the RGSM.

As regards preparations for Basel II, the ECCB’s plans include assisting member states in drafting financial legislation to address the gaps in their supervisory and regulatory framework. Additionally, prudential guidelines on the treatment of assets, market, credit and operational risks amongst others were issued. As with many other Caribbean countries that have an offshore financial sector, the government of Saint Lucia continues to closely follow the legislative reforms of the United States of America (USA) as well as the Organization for Economic Cooperation and Development (OECD). Saint Lucia is in early stages of preparations for the USA’s Foreign Account Tax Compliance Act which becomes effective in 2014. Saint Lucia is on the OECD’s white-list having signed around 18 Tax Information Exchange Agreements (TIEAs).

Relatively diversified economic base

Saint Lucia’s real GDP 2 declined by 0.8% 3 in 2012, following expansions in the prior two years of 1.5% and 0.1% respectively. Notwithstanding the economic contraction, Saint Lucia’s economic base remains the most diversified in the OECS region with the economy comprising real estate, renting and business activities 17.7% of GDP; transport 13%; hotel and restaurants 10.1%; construction 9.2% and distribution 8.1% in 2012. The economic performance in 2012 was hampered by declines in distribution 8.9%; communication 5.3%; construction 5%; other community, social and personal services 3.8%; and transport 2.5%. These declines were only partially offset by growth in mining and quarrying 78.5%; agriculture 8.4%; health 2.7%; hotels and restaurants 2.6%; public administration and compulsory social services 2.3%; education

2 In December 2010 the ECCB revised its GDP methodology as well as rebased the GDP series (to 2006 from 1990) for all 8 member states resulting in the new GDP series showing considerable improvement which were reflected in the fiscal and debt ratios. 3 Preliminary estimates as at March 2013.

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2.3%; financial intermediation 1.4%; real estate, renting and business activities 0.9%; electricity and water 0.6%; and manufacturing 0.04%. This diversity affords Saint Lucia a greater degree of economic resilience relative to its OECS peers. Saint Lucia’s nominal GDP is the largest in the OECS region and stood at US $1,318.3 million followed by at US $1,176.3 million in 2012.

The tourism industry, Saint Lucia’s main economic driver, is estimated to contribute around 60% of GDP (direct and indirect) and is the largest earner of foreign exchange 4. Despite the uncertainty in the global market stay-over arrivals suffered only a marginal decline of 1.8% in 2012. Long stay visitors from the rest of world increased by 13.4%, rest of Europe by 10.4%, Canada by 6.5%, Germany by 4.1%, and the UK by 3.6%. The UK’s performance was particularly creditable given the possible adverse impact of the introduction of the 3 rd tranche of the Air Passenger Duty (APD). France’s long stay arrivals fell by 26.4%, the USA by 6%, and the Caribbean 4.8%. Saint Lucia’s geographically diversified tourism markets provide some degree of resilience with the USA accounting for 37.5%, UK 24.7%, the Caribbean 18.3% and Canada 12.3% in 2012. Total visitor arrivals fell by 6.4% in 2012 driven by declines in cruise passengers and stay-over arrivals by 9.3% and 1.8% respectively.

There were significant flight reductions into Saint Lucia in 2012. American Eagle, Delta, American Airlines and LIAT all reduced flights into the destination while RedJet operated only in the first quarter of the year. There were some gains in 2012, especially in the UK market as Virgin Atlantic and British Airways increased flights, while Caribbean Airlines re-introduced flights. Overall seats fell to 588,240 in 2012 from 616,045 in 2011, a 4.5% decline. However, Saint Lucia has secured a non-stop service from United Airlines (out of New Jersey, USA) beginning July 13, 2013 which would increase seats by 3,850 in 2013. Additionally, increased services from Virgin Atlantic and the introduction of a Thomas Cook weekly flight would increase seats in the 2013/14 winter season.

There was mixed performance for some of the key tourism indicators in 2012. Average hotel occupancy rates increased to 62.3% from 57.3% in the prior year while cruise ship calls fell by 4.3% to 336 from 351 in 2011. Visitor expenditure rose 1.4% to US $583.7 million from US $575.6 million in the previous year. The average length of stay decreased marginally to 8.7 days from 8.9 days in 2011 and a seven-year high of 10.5 days in 2006.

4 Source: Study done by a Consultant in Tourism Economics in 2010.

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Despite the tourism industry’s mixed performance in 2012, the Saint Lucia Tourist Board is predicting a 2.7% increase in both stay-over and cruise arrivals in 2013. This increase is based on improved economic performance of its key markets and a scheduled shift of cruise ship calls from the Mediterranean to the Caribbean. In CariCRIS’ opinion, the projected increase may be a bit optimistic as cruise arrivals were down 2% in the first half of 2013 and the International Monetary Fund (IMF) growth forecasts for the USA is 1.9% and the UK is 1%, both with significant downside risks.

Saint Lucia’s manufacturing base is the most diversified within the OECS region and contributed 5.3% to GDP in 2012. The industry is driven mainly by the food and beverage, paper and paperboard and electrical sub-industries. However, the industry continues to be hampered by high manufacturing costs, particularly energy and water, and remains relatively uncompetitive when compared to its T&T peers.

The agriculture industry which was severely impacted by Hurricane Tomas in late 2010, achieved a resurgence in 2012, recording growth of 8.4%, following 3 years of contractions. The banana sub-industry, which had been the most affected by the Hurricane’s passage, grew by 52.8% in 2012. However, the Black Sigatoka disease still threatens crop production. Notwithstanding these hurdles, the authorities continued to focus on the industry with government support being provided to farmers affected by the Black Sigatoka. Additionally, initiatives are underway towards the development of sub-industries within agriculture inclusive of fisheries, farming and agro-processing.

The unemployment rate remains high at 22.6% at the end of the first quarter of 2013. In an effort to reduce the high unemployment level, the government introduced a number of targeted programmes 5 to the more vulnerable in society which had a limited effect. Structural unemployment is estimated to be around 17%, suggesting that long-term solutions incorporating training and re-training of the labour force are necessary.

5 National Initiative to Create Employment (NICE), The Single Mothers Employment Programme (SMILES), The Youth Empowerment Programme (YEP), Youth Agricultural Entrepreneurship Programme (YAEP), Short Term Employment Programme (STEP).

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External sector characterised by moderate BOP performances and relatively low external debt

Saint Lucia has generated balance of payment (BOP) surpluses for the period 2009 to 2012 (Chart 1). The overall external balance doubled to EC $44 million representing 1.2% of GDP in 2012 from EC $19.7 million or 0.6% of GDP in 2012. These BOP surpluses are attributable largely to net inflows on the capital and financial account; however, the surplus on this account fell to EC $541.8 million from EC $677.6 million in the prior year as there were moderate declines in both the capital (21.9%) and the financial (19.7%) accounts. Despite these declines, foreign direct investment (FDI) inflows increased 10.4% to EC $288.7 million in 2012, the first year of growth since 2007. CariCRIS believes FDI inflows will pick up slightly as work on a number of tourism projects (Tides Sugar Beach- Viceroy Resort, Landings, Sandals expansion, and Freedom Bay) continue, albeit at a slow pace.

Gross international reserves increased moderately, by 25.9%, to US $384.6 million in 2012 representing 5.9 months of import cover from US $305.5 million or 4.5 months of import cover in 2011. CariCRIS expects another moderate BOP performance and the maintenance of adequate reserves in 2013 as the economies of several source countries show tentative signs of recovery.

Chart 1 Balance of Payments Indicators 2008–2012

Source: Eastern Caribbean Central Bank Estimates

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External public sector debt grew by 3.8% to EC $1,167.3 million (US $432.3 million) in 2012, slower than the average growth rate of 5% in the 3 prior years. External debt to GDP rose marginally to 32.8% from 32.1% in the prior year and has averaged 32.1% over the last 3 years. Saint Lucia has a relatively moderate external debt service ratio compared to many of its regional peers; averaging 11.6% of exports of goods and non-factor services for the period 2009 to 2011. Gross financing requirements to reserves fell significantly to 54.6% in 2012 relative to 88.5% in 2011, on account of the increase in the reserves position and the lowering of the external current account deficit. The exchange system is free of restrictions for both current and capital transactions.

These rating strengths are tempered by the following:

Continued fiscal pressures resulting from a decline in revenue and rising expenditure, leading to rising debt levels

In FY2012/13 the government’s fiscal operations were adversely impacted by the decline in current revenue and the continuation of a steady rise in current expenditure (since FY2001/02). There has been a continuous deterioration in the overall fiscal deficit since FY2009/10, when it stood at 3.1% of GDP, climbing to 9.4% of GDP in FY2012/13. Current revenue fell by 4.3% in FY2012/13, a reversal of growth averaging 4.9% in the prior two years. Current revenue, as a percentage of GDP, fell to 22.3% in FY2012/13 from 23.8% in the prior year and has averaged 22.6% in the last 3 fiscal years. Effective October 1, 2012, the government introduced a 15% VAT which replaced the consumption tax, the environmental protection levy, the motor vehicle rental fee, the mobile cellular telephone tax and the hotel accommodation tax. The introduction of VAT was intended to broaden the tax base, simplify the tax system and increase compliance. Overall, VAT did not have an enhancing impact on current revenue over the prior year, though had it not been implemented current revenue would have been an estimated EC $33.7 million lower. On the other hand, current expenditure has grown every year over the five year period FY2009/10 to FY2012/13, averaging 8.4% (Table 1). As a result central government current expenditure as a percentage of GDP rose to 23.9% in FY2012/13 from 22.2% in FY2011/12. The net impact of decreasing current revenue and increasing current expenditure was that the current account slipped into a deficit position of 1.6% of GDP, the first time since 2003, following a surplus of 1.6% of GDP in the previous year.

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Table 1 Summary Fiscal Performance Highlights FY2008/09– FY2012/13

FY2008/09 FY2009/10 FY2010/11 r FY2011/12 r FY2012/13 r EC $ million Total Revenue 829.0 826.8 874.5 915.1 863.8 Current Revenue 804.9 759.6 787.8 836.0 800.2 Total Current Expenditure 648.6 683.8 742.7 778.7 856.9 Capital Expenditure 208.2 241.3 298.6 366.1 344.8 Total Expenditure 856.8 925.1 1,041.3 1,144.8 1,201.7 % Change Total Revenue 10.1 -0.3 5.8 4.6 -5.6 Current Revenue 8.6 -5.6 3.7 6.1 -4.3 Total Current Expenditure 12.8 5.4 8.6 4.8 10.0 Capital Expenditure -9.8 15.9 23.7 22.6 -5.8 Total Expenditure 6.4 8.0 12.6 9.9 5.0 Source: Ministry of Finance, Saint Lucia r: Revised

Central government has consistently run overall fiscal deficits which have averaged 6.9% of GDP in the last 3 years (Chart 2). These deficits arose from a reduction in taxes collected from profits and consumption, as well as government’s continued pursuit of a counter-cyclical fiscal policy. The deficit for FY2012/13 expanded to 9.4% of GDP, the highest in more than a decade, from 6.5% in the previous year; above CariCRIS’ base case projection of 7.5%. CariCRIS believes the Government is unlikely to meet its budgeted deficit of 7.4% in FY2013/14 and projects a deterioration in the fiscal deficit. Capital expenditure decreased to 9.6% of GDP in FY2012/13, mainly attributable to a rationalization in the implementation of the public sector investment programme. In prior years, capital expenditure was funded partially by current account surpluses averaging 1.7% over the three year period FY2009/10 to FY2011/12; however, in FY2012/13 a current deficit of EC $56.7 million representing 1.6% of GDP meant that capital expenditure was funded primarily from debt.

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Chart 2 Current Account, Overall Fiscal and Primary Balances FY2008/09–FY2012/13

6 4 2 0 2008 2009 2010 2011 2012 % -2 of -4 GDP -6 -8 -10 -12 Year

Current Account Balance Overall Fiscal Balance Primary Balance

Source: CariCRIS Sovereign Spreads, ECCB Estimates

The heavy reliance on debt funding has resulted in a more than doubling of the debt stock in the last decade. In 2012, the total public sector debt rose 11.4% to EC $2.5 billion from EC $2.3 billion in the prior year. As a result the general government gross debt, as a percentage of GDP, rose to 71.1% from 65% in 2011 and a 5-year low of 55.4% in 2008. Nonetheless, these ratios are still relatively moderate compared to its peers, and Saint Lucia remains one of the least indebted countries in the ECCU. However, the rapidly rising debt is moving further away from the ECCB’s stipulated benchmark of less than 60% of GDP to be attained by 2020. CariCRIS is of the opinion that debt levels will continue to rise in the medium term with a projection of around 76% of GDP in FY2013/14. Indeed, the subject debt programme of EC $404.5 million, intended to fund the Government’s expected fiscal deficit for FY2013/14, is within CariCRIS’ expectations for net increase in debt in FY 2013/14. Of the EC $404.5 million, EC $137.5 million will be utilized to repay maturing debt, while EC $267 million will be new borrowings to finance FY2013/14’s deficit.

The increasing debt levels are mirrored in higher interest payments which rose by 16.4% to EC $123.1 million in FY2012/13 from EC $105.8 million in FY2011/12. Interest payments in FY2012/13 consumed 15.4% of current revenue. Saint Lucia’s interest payments as a component of current expenditure (14.4%) compare favourably with higher rated Caribbean peers such as Barbados. There has been a distinct shift towards domestic debt which has

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steadily increased over the last 5 years to EC $1.4 billion (accounting for 53.9% of the total public sector debt) in 2012 from EC $654.2 million (37.3% of total public sector debt) in 2007. Meanwhile, external public sector debt has declined and stabilized as a percentage of GDP over the same period to 32.8% in 2012 from 35.5% in 2007 and averaging 32.1% in the last 3 years. The primary deficit increased to 5.6% of GDP in FY2012/13 from 3.5% of GDP reported for the prior year.

In the medium term, CariCRIS expects either a contraction or sluggish growth in revenue, in the face of subdued economic activity, and the high dependence on debt funding to continue, as the authorities strive to generate real GDP growth and stem the rise in unemployment levels. The level of debt/GDP is expected to rise rapidly, pushing Saint Lucia into the highly indebted category which is unsustainable in the long term. Furthermore, CariCRIS is of the view that expenditure pressures should be contained by increases in revenue collection and containment of discretionary expenditure going forward.

Rating Sensitivity Factors  Significant changes in the fiscal position  Substantial changes in the debt stock levels  Significant changes in the external indicators

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Table 2 Selected Economic, Social and Political Indicators 2008-2012

Average 2012 2011 2010 2009 2008 2010-12 Income & Economic Structure Nominal GDP (US $ Mn) 1,318.3 1,296.2 1,252.4 1,180 1,183.9 1,289 Nominal GDP per capita (US $) 7,877.0 7,744.7 7,562.8 7,163.2 4,761.9 7,728.2 Real GDP Growth (%) (0.8) 1.5 0.1 (0.2) 4.8 0.3 Unemployment Rate (%) 21.4 21.2 20.6 20.5 16.8 21.1 Human Development Index 82/187 82/187 - 69/182 66/179 82/187 Transparency International Corruption Perceptions Index 22/176 25/183 - 22/180 24/179 22/176 Average 2012 2011 2010 2009 2008 2010-12 Fiscal Accounts (% of GDP) Central Gov't Current Revenue 22.3 23.8 23.1 23.5 25.2 23.1 Central Gov't Current Expenditure 23.9 22.2 21.8 21.2 20.3 22.6 Central Gov't Current Balance (1.6) 1.6 1.3 2.3 4.9 0.5 Central Gov't Capital Expenditure 9.6 10.4 8.8 7.5 6.5 9.6 Central Gov't Primary Balance (after grants) (6.0) (3.5) (1.9) (0.4) 1.9 (3.8) Central Gov't Overall Balance (after grants) (9.4) (6.5) (4.9) (3.1) (0.9) (6.9) Central Gov't Gross Debt 66.5 59.5 54.2 51.4 49.9 60.1 General Gov't Gross Debt 71.1 65.0 60.2 57.4 55.4 65.4 Average 2012 2011 2010 2009 2008 2012-10 Monetary, Financial & Exchange Rate Indicators Consumer Price Index (end of period) 5.0 4.8 4.2 (3.4) 3.8 4.7 Consumer Price Index (annual average) 4.2 2.8 3.3 (1.7) 7.2 3.4 Credit to the Private Sector & NFPE (% GDP) 130.7 123.0 121.3 130.0 130.4 125.0 Credit to the Private Sector & NFPE (YOY change %) 5.1 2.4 1.2 2.2 10.0 2.9 Non-Performing Loans/Total Loans (%) 15.3 13.2 12.4 7.9 6.6 13.6 Provision for NPL (% of NPL) 37.9 36.2 23.2 31.4 37.5 32.4 Banking Sector Capital Adequacy Ratio (%) 19.2 19.0 18.6 18.3 17.5 18.6 Base Money (YOY change) 14.1 1.5 9.8 10.2 3.1 8.5 Broad Money or Money Supply (YOY change %) 2.5 6.7 1.9 1.3 6.7 3.7 Average Bank Deposit Rate (%) 2.9 3.1 3.3 3.1 3.2 3.1 Average Bank Lending Rate (%) 8.5 9.0 9.5 9.7 9.6 9.0 Interest Rate Spread 5.6 6.0 6.2 6.6 6.4 5.9 Nominal Exchange Rates (lc per US$) 2.7 2.7 2.7 2.7 2.7 2.7 Nominal Effective Exchange Rates (YOY change %) 0.0 0.0 0.0 0.0 0.0 0.0 Real Effective Exchange Rates (YOY change %) 5.1 (2.8) (0.4) 3.8 4.3 0.6 Average External Sector Indicators 2012 2011 2010 2009 2008 2012-10 Current Account Balance (% GDP) (14.0) (18.8) (16.2) (11.6) (28.7) (16.3) Capital & Financial Account Balance (% GDP) 15.2 19.4 18.7 14.4 27.8 17.8 Overall External Balance (% GDP) 1.2 0.6 2.5 2.8 (0.9) 1.4 External Public Debt (% GDP) 32.8 32.1 31.4 31.6 30.7 32.1 Gross International Reserves (US$ Mn) 384.6 305.5 307.0 283.0 258.4 332.4 Net International Reserves (US$ Mn) 131.7 64.4 97.5 (8.9) 11.0 97.8 Gross International Reserves (in months of imports) 5.9 4.5 4.7 5.2 4.0 5.0 External Public Sector Debt Service (incl. STD) (% of exports of na na 6.8 7.8 8.3 7.6 GNFS) Total Debt Service (% of exports of GNFS) na 11.6 10.7 12.4 11.3 11.6 Gross Financing Requirements / Reserves (%) 54.6 88.5 81.5 58.2 143.9 74.9

August 15, 2013

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