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QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE OF CONTENTS REFERENCE STATISTICAL ANNEX TECHNICAL NOTES 1.0 EXECUTIVE SUMMARY PAGE NO 2 5 8 9 2.0 THE INTERNATIONAL ECONOMY 10 3.0 DOMESTIC ECONOMIC DEVELOPMENTS 3.1 REAL ECONOMY 3.2 FISCAL OPERATIONS 3.3 MONETARY DEVELOPMENTS 3.4 MONEY MARKET DEVELOPMENTS 3.5 BANKING SECTOR DEVELOPMENTS 3.6 BALANCE OF PAYMENTS 3.7 EXCHANGE RATE DEVELOPMENTS CHRONOLOGY OF MAJOR EVENTS ANNEX TABLES 15 15 20 23 26 27 31 34 36-37 38-90 1 QUARTERLY ECONOMIC REVIEW MARCH 2011 REFERENCE The following articles have appeared in previous Quarterly Reports since 1987.
Issue Title Q4 December 1986 The System of National Accounts of the Republic of Vanuatu: Data Sources, Methodology, and Assumptions Q1 March 1987 Press Announcement from Minister of Finance concerning The Cyclone UMA – Economic recovery program (A) Duty Exemptions on replacement materials & equipment (B) Duty Exemptions on New Projects Insurance settlements / Loss adjustment disputes Future cyclone insurance cover in Vanuatu Banking Loans for reconstruction Business License fees 1988 Q3 September 1988 Budget of the Government of Vanuatu for 1989 Q3 September 1988 Vanuatu National Provident Fund: First year of operations Q1 March 2000 The Reserve Bank’s Exchange Rate Policy Q2 June 2000 Money Laundering Q3 September 2000 Governor’s Speech on the Exhibition of the “Mani Blong Yumi” Money in Vanuatu Society Q3 September 2000 Notice to Commercial Banks concerning Money Laundering Q4 December 2000 Money is Lubricant of the economy Q4 December 2000 Capital Adequacy Q1 March 2001 Update on Basel Capital Adequacy Reform Proposals Q2 June 2001 Capital Adequacy Q3 September 2003 International Banks – Overview of Developments Q4 December 2003 Monetary Policy Statement by the Governor Q1 March 2004 International Banking Act No.
4 Q1 March 2004 The Association of Financial Supervisors of Pacific Countries in collaboration with PFTAC 2 QUARTERLY ECONOMIC REVIEW MARCH 2011 Q2 June 2004 Governor’s Speech for Education Economics Workshop Q2 June 2004 Governor’s Speech for Media Freedom Day Q2 June 2004 Press Release on Biri Group Q3 September 2004 Bank Supervision Policy Guideline 3, Supervision of the Adequacy of Liquidity of Banks Q3 September 2004 Reserve Bank Undertakes Major Review Q4 December 2004 Governor’s speech on overcoming Vanuatu’s economic challenges, 2004 business forum Q4 December 2004 Governor’s speech for the association of financial supervisors of the Pacific countries meeting Q4 December 2004 The formulation of monetary policy in Vanuatu Q4 December 2004 What are Reserve Bank notes Q4 December 2004 Excess reserves Q1 March 2005 Challenges to the Monetary Policy: The case of Vanuatu presented to the regional seminar on Monetary Policy implementation Q1 March 2005 Summary of Business Survey March 2005 Q1 March 2005 Monetary Policy Instruments – The case for Vanuatu Q1 March 2005 What is the Balance of Payments?
How it is compiled in Vanuatu Q1 March 2006 Factors determining Vanuatu imports – A brief analysis Q1 March 2006 International Banking Act No.
4 of 2002 Q2 June 2006 Bekoz Bank Limited Q1 March 2007 Reserve Bank Issues Domestic Banking License to Bred Bank Q3 September 2007 Reserve Bank Issues Domestic Business License to operate as a credit institution to Credit Corporation (Vanuatu) Ltd Q4 December 2007 International Banking Act No.4 of 2002 Q4 December 2007 Reserve Bank Issues International Banking Business License to Financial Partners Bank Q3 September 2008 Reserve Bank raises Rediscount Rate Q4 December 2008 Insurance Amendment Act No.
29 of 2009 Turbulance in Global Financial Markets Relaxation of Reserve Bank’s Monetary Policy and Prudential Instruments Q1 June 2009 Monetary Policy Statement by Governor Mani Blong Yumi – Money in Vanuatu Society 3 QUARTERLY ECONOMIC REVIEW MARCH 2011 Q3 September 2009 Monetary Policy Statement by Governor Q1 March 2010 Task & Functions of the Reserve Bank Q2 June 2010 Monetary Policy Statement by the Governor Business Sentiment Report Q3 September 2010 Monetary Policy Statement by the Governor Q1 March 2011 Monetary Policy Statement by the Governor 4 QUARTERLY ECONOMIC REVIEW MARCH 2011 STATISTICAL ANNEX TABLE NO.
I Monetary Conditions (Tables 1 - 21) 1 Assets of the Reserve Bank of Vanuatu PAGE NO.
Liabilities of the Reserve Bank of Vanuatu Assets of Commercial Banks Liabilities of Commercial Banks Monetary Survey: A Consolidated Statement of Accounts of the Monetary Institutions Domestic Money Supply and Components Distribution of Vatu and Foreign Currency Deposits of Residents by Categories 8 Time Deposits in Vatu of Residents with Commercial Banks by Maturity Period 9 Commercial Banks' Sectoral Distribution of Loans and Advances in Vatu and Foreign Currency 10 Distribution of Vatu Advances by Interest Rates as at end of March 2011 11 Selected Interest Rates for Local Commercial Banks 12 Denominations of Currency on Issue 13 Net Official Reserves 14 Reserve Bank Notes Issued in Primary Market 15 Commercial Banks Liquidity 16 Commercial Domestic Banks Consolidated Capital 17 International Banks Balance Sheet (a) 18 International Banks Balance Sheet (b) 19 Domestic Banking Industry Foreign Exchange Turnover 20 21 Domestic Banking Industry Core set of Financial Soundness Indicators Domestic Banking Industry – Profit (Vatu ‘000) 5 38 39 40 41 42 44 45 46 47 49 50 51 52 53 54 55 57 59 61 62 63 QUARTERLY ECONOMIC REVIEW MARCH 2011 II Government Finance (Tables 22 - 25) 22 Vanuatu Government Fiscal Operations 23 Government Revenue Classified By Major Sources 24 Government Expenditure Classified by Major Category 25 Vanuatu Government Bonds Outstanding II External Sector (Tables 26 - 32) 26 Exchange Rates: Vatu per Unit of Foreign Currencies 27 Summary of Balance of Payments 28 International
 Investment Position 29 Exports 30 Imports 31 Exports by Country of Consignment 32 Imports by Country of Consignment IV.
Finance Centre (Tables 33 - 35) 33 Company Registration in Vanuatu 34 Shipping Registration 35 Finance Center Institutions: Local Expenditure, Value-Added, Employment and Total Assets V. Real Sector (Tables 36 - 46) 36 Visitor Arrivals 37 Visitor Arrivals by Country of Origin / Hotel Occupancy Rates 38 Consumer Price Indices (Relative to the previous quarter) 39 Consumer Price Indices (Relative to the same quarter in the previous year) 40 Consumer Price Indices by Region (Relative to the previous quarter) 41 Consumer Price Indices by Region (Relative to the same quarter in the previous year) 42 Cattle Slaughter by Abattoirs 6 64 65 66 67 68 69 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 QUARTERLY ECONOMIC REVIEW MARCH 2011 43 Energy Consumption 44 Postal Services 45 Motor Vehicle Registration – Port Vila and Luganville 46 Number of Provident Fund contributing members/full employment 87 88 89 90 7 QUARTERLY ECONOMIC REVIEW MARCH 2011 TECHNICAL NOTES Statistical data in the Quarterly Economic Review are based on the latest available information, and several statistical tables are substantially up-dated and amended from time to time to reflect figures revised by respective sources.
Abbreviations used are: = = = e n.a.

E n.e.i.

= p - r .. R = = = = = Estimated Not yet available Estimated by Source Not elsewhere included Provisional Nil Revised Negligible/Almost Revised by Source 8 QUARTERLY ECONOMIC REVIEW MARCH 2011 1.0 EXECUTIVE SUMMARY As in 2010, the world economy continued an uneven recovery with significant risks persisting during the first quarter of 2011.
Overall economic growth continued, but occurred at a much faster rate in emerging and developing countries than in advanced economies.

With the recovery in demand, key commodity prices further increased, pushing up headline inflation figures in advanced economies.

This combined with persistent high unemployment in the US and Europe to present monetary policy challenges.

Monetary authorities in many emerging economies further tightened policy in efforts to prevent the emergence of asset price bubbles.
Domestically, agricultural output declined from the levels recorded during the previous quarter, although this can partially be explained by seasonal factors.

The value of export commodities was supported by increasing international prices.

Air visitor arrivals showed a marked fall compared to the same period of 2010.

Forecasts for GDP growth over the course of 2011 are underpinned by the expected implementation of a number of major construction projects, particularly during the second half of the year.
Annual consumer inflation showed a marked slowing during the quarter, with the index showing a quarter-on-quarter decline.

The slowing was driven by a quarterly decline in prices under a number of categories including food, housing & utilities, and household supplies.

Over the year, the increase was driven by a small increase in the food category, which carries the heaviest weight in the basket, along with housing & utilities, education, and health price increases.
The Government ran an overall quarterly surplus for the first time since the March quarter of 2010, driven by increases in recurrent revenue both over the quarter and over the year.

A year-on-year decline in grants received meant that total revenue declined compared to the same quarter of 2010, but did still increase compared to the December quarter.
Government recurrent and development expenditure recorded a significant decline over 9 the quarter, although recurrent expenditure was higher than the level one year previously.

The quarterly improvement in the Government’s cash flow also reflects the fact that a major non- recurrent transfer to a Government body was made in the previous quarter.
Broad money supply declined over the quarter, driven by the continued decline in the banking system’s net foreign assets, which outweighed an increase in domestic credit.

Between December and March, the commercial banks’ net foreign assets recorded a significant decline, whilst those of the Reserve Bank showed an increase.
The expansion of domestic credit in the quarter was driven by lending to the private sector, specifically lending to businesses, whilst net claims on the Government declined- in line with the fiscal surplus.

The narrow money supply recorded a quarterly decline, resulting from falls in both demand deposits and currency in circulation.

The Reserve Bank was aggressive in its open market operations during the quarter, significantly increasing the amount of RBV Notes on issue.
Overall commercial bank liquidity recorded a quarterly increase, although the stock of excess reserves declined.

prudential requirements, Whilst the domestic banking industry remained robust and in compliance with all of the Reserve Bank’s slight deterioration was observed in the quality of loan portfolios.

Revised prudential guidelines enhancing the quality of capital the Reserve Bank requires commercial banks to hold became effective at the start of 2011.
The industry’s profits declined over the quarter, but remained healthy.

a Vanuatu’s current account deficit recorded a significant widening in the March quarter, driven by reductions in official grants and services income.

However, the trade deficit recorded a quarter-on- quarter decline, from a reduction in imports.

The capital account surplus widened compared to the December and March quarters of 2010.
Foreign exchange reserves increased during three months, moving Vanuatu’s import cover further above the Reserve Bank’s minimum comfortable threshold.

resulting primarily the QUARTERLY ECONOMIC REVIEW MARCH 2011 2.0 THE INTERNATIONAL ECONOMY The US In the first quarter of 2011, the underlying momentum of the global recovery was seen as remaining positive, with continued improvement in international financial conditions and a continued expansion of economic activity in most areas.
However, as in previous quarters, the sustained imbalance between advanced economies on one hand and emerging and developing economies on the other presented significant challenges.

Increases in global demand underlined strong rises in commodity prices, contributing to higher headline inflation figures.

In many emerging and developing economies this combined with strong capital inflows, robust domestic demand, and shrinking spare capacity to create significant inflationary pressures.
The IMF’s April 2011 World Economic Outlook left forecasts from global economic growth in 2011 and 2012 unchanged at 4.4 percent and 4.5 percent respectively.

The 2011 forecast for emerging and developing economies was also left unchanged at 6.5 percent, with the forecast for 2012 also growth of 6.5 percent.

However, the projected 2011 growth rate for advanced economies was revised downwards by 0.1 percentage point to 2.4 percent, before accelerating slightly to 2.6 percent in 2012.
The risk of potentially destructive asset price bubbles in emerging economies was highlighted as a major developing threat to the stability of the world economy.

Figure 1: World GDP Growth (Percentage Change; Annual Data) 6 % 5 4 3 2 1 0 -1 -2 6 % 5 4 3 2 1 0 -1 -2 2002 Source: IMF 2004 2006 2008 2010f 2012f 10 In the first quarter of 2011, economic growth in the US slowed to an annualised rate of 1.9 percent, compared to an annualised increase of 3.1 percent in the December quarter of 2010.
The slowdown was attributed to increases in imports and a reduction in spending by the federal government, as well as a deceleration consumption in growth of private expenditure.

Despite the sustained economic expansion, consumer confidence continued to be weighed down by weaknesses in the housing sector.

Year-on-year inflation in March accelerated to 2.7 percent, up from 1.5 percent in December.
During the quarter, the headline CPI increased by 2.0 percent, as compared to a 0.3 percent increase in the previous quarter.

However, as in the previous quarter, this was primarily attributed to increases in food and fuel prices, with the index for all items except energy and food increasing by only 1.2 percent over the year.

The energy price index recorded an annual increase of 15.5 percent, whilst the food price index increased by 2.9 percent.
Figure 2: US GDP and CPI (Percentage Change; Annual Data) 6 % 4 2 0 -2 -4 -6 CPI GDP 6 % 4 2 0 -2 -4 -6 1999 2001 2003 2005 2007 2009 2011 Source: Bureau of Economic Analysis, Bureau of Labor Statistics Asia in growth rates, Asia Despite some moderation continued to be the fastest growing region in the world, forecast by the IMF to expand by 6.7 percent in 2011.
The rapid expansion was supported by strong export QUARTERLY ECONOMIC REVIEW MARCH 2011 Figure 3: Euro area GDP and CPI (Percentage Change, Annual Data) % 6 4 2 0 -2 -4 -6 GDP CPI % 6 % 4 2 0 -2 -4 -6 1999 Source: Eurostat 2001 Australia 2003 2005 2007 2009 2011 recorded a significant The Australian economy contraction in the first quarter, with GDP falling by 1.2 percent.
This was attributed primarily to the effects of flooding and cyclone damage in Queensland and Western Australia, which severely impacted mining exports.

However, growth is expected to rebound later in the year as output is restored.

Australia’s terms of trade recorded a 5.8 percent increase in the quarter, building on an increase of 1.1 percent in the previous quarter.

The unemployment rate remained at 5.1 percent or lower throughout the quarter.
Consumer inflation recorded a significant quarter-on- quarter acceleration, with the CPI increasing by 1.6 percent as compared to 0.4 percent in the December quarter of 2010.

In year-ended terms, the inflation rate picked up to 3.3 percent from 2.7 percent.

The quarterly increase was driven by a higher price for automotive fuel, which increased by 8.8 percent, followed by vegetables, which increased by 16.0 percent.

the growth, as well as robust domestic demand.


However, with increased utilisation of spare capacity, combined with high commodity prices, inflationary pressures built during the quarter.

The Chinese economy was estimated to have expanded by 9.7 percent over the year, growing by 2.1 percent during the quarter.

The IMF forecasted growth of 9.6 percent in 2011.

However, Chinese inflation showed an accelerating trend, with the headline consumer price index increasing by 5.4 percent over the year.
Food prices increased by 11.7 percent.

The Singapore economy expanded by 8.5 percent on a year-on-year basis, slowing from a 12.0 percent expansion in the year to the December quarter of 2010.

However, on a seasonally-adjusted quarter-on- rate of growth quarter annualised basis, accelerated rapidly to 23.5 percent from 3.9 percent in the previous quarter.

The South Korean economy expanded by 4.2 percent over the year, growing a seasonally-adjusted 1.4 percent during the quarter.
the Japan to have The Japanese economy was estimated contracted by 0.9 percent during the first quarter of 2011, following a revised contraction of 0.7 percent during the final quarter of 2010.

Much of the contraction was attributed to the major earthquake and subsequent tsunami and nuclear crisis that occurred in March, the effects of which are likely to continue in following quarters.
At the end of the March quarter, the headline consumer price index was at the same level as at the end of the December quarter of 2010 and the March quarter of 2010, after declining in the first months of the year.

Europe During the first quarter of 2011, the euro zone economy was estimated to have expanded by 0.8 percent, accelerating from growth of 0.3 percent during the fourth quarter of 2010.

Over the year, growth was estimated at 2.5 percent, up from 1.9 percent in the year to the previous quarter.
Inflation during the quarter accelerated to 2.5 percent year-on-year from 2.0 percent previously.

During the quarter, consumer prices were estimated to have increased by 1.0 percent, as compared to 0.5 percent in the December quarter of 2010.

Annual underlying inflation (excluding unprocessed food and fuel) was 1.3 percent.
11 QUARTERLY ECONOMIC REVIEW MARCH 2011 Figure 4: Australia GDP and CPI (Percentage Change, Annual Data) Figure 5: New Zealand GDP and CPI (Percentage Change; Annual Data) 7 % 6 5 4 3 2 1 GDP CPI* 7 % 6 5 4 3 2 1 0 1999 2001 2003 2005 2007 2009 0 2011 *Adjusted for interest changes prior to the September quarter 1998 and tax changes of 1999-00 Source: Reserve Bank of Australia, Australian Bureau of Statistics New Zealand During the December quarter of 2010, New Zealand’s economy recorded an expansion of 0.2 percent, reversing a contraction of 0.2 percent in the September quarter.
Year-on-year growth increased was 1.5 percent.

The increase was attributed to strong increases in manufacturing and real estate & business services, outweighing a contraction in wholesale and retail trade.

Despite significant improvements in New Zealand’s terms of trade, exporters appeared to focus on increasing repairing balance expenditure.

In February, the city of Christchurch experienced a major earthquake causing widespread loss of life, destruction.
This is likely to have had a significant negative impact on economic activity during the first quarter of 2011. rather sheets than In the March quarter of 2011, the headline CPI increased by 0.8 percent, bringing the year-on-year increase to 4.5 percent.

This compares to quarterly and annual increases of 2.3 percent and 4.0 percent, respectively, in the December quarter of 2010.

The majority of the annual increase resulted from an increase in the goods and services tax in late 2010.
During the March quarter, the increase primarily came from the transport category, reflecting higher fuel prices.

% 6 4 2 0 -2 -4 CPI GDP % 6 4 2 0 -2 -4 1999 2001 2003 2005 2007 2009 2011 Source: Reserve Bank of New Zealand, Statistics New Zealand Market Developments The graph below shows the pattern for short term interest rates for some of the world economies most relevant to Vanuatu.

The rate shown in each case is a 3-month or 91-day money market rate.
Figure 6: Nominal Short-Term Interest Rates (Percentage Change; Monthly Data) 12 % AUS US EUR NZ 10 8 6 4 2 0 1999 2001 2003 2005 2007 2009 2011 12 % 10 8 6 4 2 0 Source: Reserve Bank of Australia, Reserve Bank of New Zealand, Bank of England, Federal Reserve.
12 QUARTERLY ECONOMIC REVIEW MARCH 2011 The largest fall in short term interest rates was recorded for New Zealand, and occurred almost entirely during the month of March, which can largely be explained by changes in monetary policy in response the major Christchurch earthquake.

A small decline was also recorded for short-term rates in Australia, following a general increasing trend over the past year.
Short-term rates in the US remained essentially unchanged during the quarter, reflecting the Federal Reserve’s repeated commitment to maintaining a very accommodative monetary policy stance for an extended period.

Euro area short term rates increased marginally, although this did bring them to their highest level since June 2009.
The increase can be attributed in large part to increasing investor expectations that the European Central Bank would act to tighten monetary conditions in response to accelerating headline inflation.

Long Term Interest Rates The graph below shows the pattern for 10-year government bond yields for some of the world economies most relevant to Vanuatu.
Figure 7: Nominal Long-Term Interest Rates (Percentage Growth; Monthly Data) 12 % 10 8 6 4 2 0 1999 AUS NZ US EUR 12 % 10 8 6 4 2 0 increase over the quarter, in spite of asset purchases by the Federal Reserve, although the month of March recorded a decline.

Small declines in long-term bond rates were recorded for Australia and New Zealand.

Stock Markets The following graph shows the movements in share indices from some of the world’s largest markets.
Figure 8: Stock Markets (Indices; September 2002=100) 250 Index 200 150 100 50 FTSE 100 S&P 500 NZ 50 ASX 200 0 2003 2005 2007 2009 2011 Source: Financial Times, European Central Bank, Reserve Bank of Australia.

250 Index 200 150 100 50 0 All four stock market indices included in Figure 8 recorded gains at the end of the March quarter as compared to December 2010, building on consecutive quarterly gains since the September quarter of 2010.
The largest gain was again made by the S&P 500, which increased by 5.4 percent during the quarter, resulting in an increase of 13.4 percent over the year.

This was followed by the NZ 50, which increased by 4.0 percent over the quarter and 5.3 percent over the year.

The FTSE 100 increased by 0.3 percent over the quarter and 4.0 percent over the year to reach its highest level since May 2008.
Despite increasing by 2.0 percent in the March quarter, the ASX 200 recorded a decline of 0.8 percent over the year.

2001 2003 2005 2007 2009 2011 Oil Markets Source: Reserve Bank of Australia, Reserve Bank of New Zealand, Bank of Japan, European Central Bank.

Of the four series shown in Figure 7, the largest increase was shown for the Euro area, this can in part be seen as reflecting the resurgence of investor unease about the affordability of sovereign debt in a number of peripheral euro member states.
The yield on long- term US government debt also recorded a slight During the quarter, the average international price of oil (Dubai Fateh, West Texas Intermediate, and Brent Crude) recorded a further increase, going from US$90.10 per barrel in December to US$108.65 in March.

The average for the quarter was US$99.68, up from US$85.46 in the December quarter of 2010.
Each consecutive month during the quarter recorded a price increase, although the largest percentage change was 13 QUARTERLY ECONOMIC REVIEW MARCH 2011 higher international prices was reduced by the strong appreciation of the Australian dollar.

The Reserve Bank of New Zealand reduced its policy interest rate by 0.5 percentage points in March.

The move was described as a pre-emptive measure to limit the economic the major Christchurch earthquake in February.
The Bank forecast relatively weak growth for the first half of 2010, before picking up as reconstruction activities got underway, at which point it was anticipated that monetary stimulus would need to be removed.

impact of for a At every decision during the quarter, the US Federal Reserve reiterated its expectation that exceptionally accommodative monetary policy was likely to be appropriate considerable period, whilst maintaining the target for the federal funds rate at between zero and 0.25 percent.
Furthermore, implementation of the US$600 billion second round of quantitative easing continued as initially outlined.

Despite recognising that the economic recovery did show signs of firming, unemployment remained high and underlying inflation remained low, therefore the central bank’s dual mandate called for the further easing in monetary policy.
The European Central Bank identified inflationary risks as concentrating on the upside, largely relating to increasing international commodity prices, but in light of elevated moderate monetary macroeconomic uncertainty opted its accommodative monetary policy stance.

However, stress on the need to prevent an increase in inflation expectations and potential broader-based second round effects increased investor expectations that monetary conditions would be tightened.
expansion and to maintain recorded between February and March, which saw an increase of 11.2 percent.

This can in part be attributed to civil and political unrest amongst a number of major oil producers in the Middle East and North Africa.
Figure 9: Average Spot Price (US$/Barrel) for Crude Oil Month Average Quarter Average 140 US$ 120 100 80 60 40 20 0 2001 Source: IMF 2003 2005 2007 2009 2011 140 US$ 120 100 80 60 40 20 0 Key Interest Rates Of the central banks listed in Table 1, only the Reserve Bank of New Zealand altered its policy rate during the first quarter of 2011.
Elsewhere, the People’s Bank of China continued to aggressively tighten monetary conditions through both increases in its policy interest rate and increases in commercial banks’ reserve requirements.

The Reserve Bank of Australia announced that it would leave its policy interest rate unchanged following both of the monetary policy meetings during the quarter.
Following previous rate increases, the central bank described its stance as mildly restrictive, which was seen as being consistent with its inflation target in the medium term.
In the short term, upward pressure was expected to be put on headline inflation from supply shocks related to natural disasters, but the impact of 14 QUARTERLY ECONOMIC REVIEW MARCH 2011 Table 1: Key Interest Rates (Percent; End of Period) US Fed Funds Rate Euro Refi Rate Australian Cash Rate New Zealand Cash Rate Vanuatu Rediscount Rate 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 Q4 2011 Q1 Sources: US Federal Reserve, European Central Bank, Reserve Bank of Australia, Reserve Bank of New Zealand and Reserve Bank of Vanuatu 3.0 DOMESTIC ECONOMIC DEVELOPMENTS Figure 10: Real Gross Domestic Product (Contribution to Growth; Annual Data) 3.1 REAL ECONOMY Domestic economic indicators showed improving results in the March quarter of 2011.
Despite declines in the volume of production across various major export commodities, earnings remained high as a result of increased global prices.

During the quarter, there was a decline in total tourism arrivals into the country resulting from a drop in cruise ship and air visitor arrivals.

Although March quarter has recorded a quarterly decline for the past two years, the decline in March 2011 was more pronounced.
they all showed an In the agriculture sector, Vanuatu’s prime commodities of coconut oil, copra, beef, and kava exports recorded a decline from the very high levels recorded in the previous quarter.

However, with the exception of increase when coconut oil, compared to the same period of 2010.

The decline in cocoa can largely be attributed to seasonal factors, with its low production season extending for a 6-month period from October through to March.
Other exports remain roughly stable in the quarter, whilst fish and alcoholic drinks showed improvement over the year.

% 6 4 2 0 -2 -4 -6 % 6 4 2 0 -2 -4 -6 Forecast Services Agriculture Forestry& Fisheries Industry Total Real GDP growth (%) 01 02 03 04 05 06 07 08 09 10 11 12 Source: National Statistics Office; MEC(Approved projections); 2010 - Est.
(Real GDP from 1999 have been re-based to 2006 prices) for 2010 The GDP growth estimate remained unchanged from the February forecast at 2.2 percent, a slower growth pace than 3.5 percent in 2009.

Real GDP growth for 2011 was projected at 3.0 percent.

This is driven by growth from the services sector of 2.3 percent, the agriculture sector of 2.1percent, and the 15 QUARTERLY ECONOMIC REVIEW MARCH 2011 industry sector of 7.7 percent.
The forecast for growth in the industry sector is driven by an expected increase in construction as new projects are expected to be implemented towards the second half of the year.

The services sector is still forecast to record positive overall growth over the year, although downside risks to the retail, food, and accommodation sub-sectors are evident from the decline in air visitor arrivals in the first three months of the year.
The agriculture sector is expected to maintain growth, supported by high export prices.
Figure 11: Real Gross Domestic Product (Sector Growth Rates; Annual Data) Industry Agriculture Forestry& Fisheries Services 20 % 15 10 5 0 -5 -10 Forecast 20 % 15 10 5 0 -5 -10 2005 2006 2007 2008 2009 2010 2011 2012 Source: National Statistics Office; Ministry of Finance (EREAU) projections; 2010 - Estimate (new GDP figures after re-basing of GDP to 2006 prices) (VAT) collections, Partial indicators of domestic consumption suggested that domestic demand rose slightly in the first quarter of the year, with the main indicators including Value imports for home Added Tax consumption and private sector lending growing compared to the March quarter of 2010.
This suggests that business sentiment the quarter, although to some extent the increased value of imports may be explained by increased import prices.

Year-on- year inflation rate declined 2.7 percentage points to 0.7 percent, well within the Reserve Bank’s comfortable target range of 0-4 percent.

improved in Copra and Coconut Oil In the March quarter of 2011, the level of copra production fell by 26 percent from the previous quarter to 7,442 tons.
Despite the quarterly drop in production, the value of production increased due to higher prices, growing by 4 percent to VT482 million.

This was compared to 10,086 tons valued at VT465 million in 16 the December quarter 2010.

In line with the upward trend in global commodity prices, the average domestic price for copra rose to between VT65,000 per ton and VT78,000 per ton in Luganville.

When compared over the year, production was down by 10 percent.
Table 2: Domestic Economic Indicators 2006 2007 2008 2009 2010 Real GDP Growth (%) Annual inflation rate (%) Production Copra(t) 7.2 6.8 6.3 3.5 2.2e 1.8 4.1 5.8 2.3 3.4 19,462 30,816 37,587 15,258 36,066 Cocoa(t) 1,314 972 750 956 897 Beef(t) 2,708 2,936 3,278 3,032 3,329 3,696 7,336 11,899 5,316 10,325 575 316 758 477 496 68,179 81,345 90,657 100,675 97,180 85,922 85,737 106,138 124,818 140,468 51.5% 89.0% 48.4% NA NA 45,906 48,944 54,868 56,924 61,071 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 2.8 2.7 2.3 3.4 0.7 2.4 0.7 0.1 0.2 -0.4 8,304 7,774 10,139 10,086 7,442 Coconut oil exports (t) Kava exports (t) Air arrivals (no.)
Cruise ship arrivals (no.)

Hotel Occ.

Rate Energy Consumptio n (kWh) Quarterly Inflation rate (year- ended %) Inflation rate (quarterly %) Production Copra(t) Cocoa(t) Beef(t) 33.5 805r 416 821 245 920r 203 898 3,803 160r - 69 115 154 2,579 3,943 19,897 21,523 29,513 Coconut oil exports(t) Kava exports (t) Air arrivals(no.)

Cruise arrivals(no.)

Total Non- Res.


Visitors Energy Consumptio n (KWh) * Estimate, NA – Not Available, p – projected, r - revised Source: Vanuatu National Statistics Office 61,669 32,186 14,593 54,839 33,930 15,836 53,827 33,316 14,835 15,807 41,036 67,283 26,247 12 841e 3,461 90 15,792 33,316 49,108 Na QUARTERLY ECONOMIC REVIEW MARCH 2011 During the quarter, copra exports declined 33 percent to 3,768 tons valued at VT306 million, but more than doubled over the level a year ago.
Copra exports contributed 22 percent of total goods export earnings in the quarter.

The average price for copra on the world market rose strongly by 32 percent to US$1,379 per ton in the March quarter, compared to US$1,038 per ton in the previous quarter.
Figure 12: Quarterly Copra Exports (Volume and Level of Export; Quarterly Data) Export Volume (LHS) Export Value (RHS) 14,000 Tons 12,000 10,000 8,000 6,000 4,000 2,000 840 MVT 720 600 480 360 240 120 0 Mar-05 Mar-07 Mar-09 Mar-11 Mar-06 Mar-08 Mar-10 0 Source: VNSO Despite a slight decline in coconut oil exports in the quarter, the level of production remained elevated at 3,461 tons compared to 3,803 tons in the final quarter of 2010.
However, with the increase in prices, the value of production rose 12 percent over the previous quarter to VT432 million.

There was no production in the March quarter of 2010 (Coconut Oil Production Ltd re-opened under new Management in May 2010).

Coconut Oil contributed 31 percent of goods exports in the quarter (compared to 25 percent in the previous quarter), making it the highest commodity export earner.
In the March quarter, the average price for coconut oil in the world market rose ton from US$1,546 per ton in the December quarter, in line with steady increase in the copra price on the global market.
to US$2,073 per Figure 13: Quarterly Coconut Oil Exports (Volume and Value of Export; Quarterly Data) Export Volume (LHS) Export Value (RHS) Tons 6,000 5,000 4,000 3,000 2,000 1,000 480 MVT 400 320 240 160 80 0 Mar-05 Mar-07 Mar-09 Mar-11 Mar-06 Mar-08 Mar-10 - Source: VNSO Cocoa In line with the low harvesting season for cocoa, the production level dropped to 12 tons valued at VT2 million compared to 203 tons in the previous quarter.

Similarly, cocoa exports fell to 25 tons valued at VT6 million.
The average price for cocoa in the world market rose to 334 US cents per Kg (US$3,343 per ton) in the quarter from 297 US cents per Kg (US$2,970 per ton) in the previous quarter.
Figure 14: Quarterly Cocoa Exports (Volume and Value of Export; Quarterly Data) 200 MVT 180 160 140 120 100 80 60 40 20 - Export Volume (LHS) Export Value (RHS) Tons 800 700 600 500 400 300 200 100 0 Mar-05 Mar-07 Mar-09 Mar-11 Mar-06 Mar-08 Mar-10 Source: VNSO 17 QUARTERLY ECONOMIC REVIEW MARCH 2011 Kava Kava exports declined in the March quarter, following consecutive quarter-on-quarter increases in previous periods, with sales totalling 90 tons valued at VT95 million.
However this represented a 30 percent increase over the year.

The strength in exports over the year shows demand for exports remained buoyed, although the depreciation of the US dollar would depress the vatu value export earnings.

In the quarter, kava exports contributed 7 percent of goods export earnings (compared to 11 percent in the previous year).
Figure 15: Quarterly Kava Exports (Volume and Value of Export; Quarterly Data) Export Volume (LHS) Export Value (RHS) 300 Tons 250 200 150 100 50 300 MVT 250 200 150 100 50 0 Mar-05 Mar-07 Mar-09 Mar-11 Mar-06 Mar-08 Mar-10 0 Source: VNSO Beef Total beef production declined slightly in the quarter to 841 tons, with 4,087 cattle heads slaughtered, but was up by 4 percent compared to the same quarter of 2010.
The slight decline in the quarter can be attributed to a decline in production from the major abattoir in Port Vila, Val Pacific Limited, by 10 percent.

Beef exports rose by 4 percent in the quarter, and 60 percent over the year to 300 tons valued at VT136 million.

Beef exports contributed 10 percent of total goods export earnings in the March quarter, the third highest contributor behind coconut oil and copra.
Figure 16: Quarterly Beef Exports (Volume and Value of Export; Quarterly Data) Export Volume (LHS) Export Value (RHS) 400 Tons 350 300 250 200 150 100 50 0 Mar-05 Mar-07 Mar-09 Mar-11 Mar-06 Mar-08 Mar-10 Source: VNSO Other Export Products 240 MVT 210 180 150 120 90 60 30 0 Live fish exports totalled 102 tons in the quarter, valued at VT46 million, with shipments contributing 3 percent of total goods exports in the quarter.
Exports of alcoholic drinks fell in the quarter but rose over the year to VT40 million, contributing 3 percent of total goods export earnings in the quarter.

The proportion of other products in total goods exports fell in the quarter and over the year to 10 percent, valued at VT107 million.
Tourism In the March quarter, total non-resident visitor arrivals (cruise-ship plus air visitors) declined 27 percent quarter-on-quarter and declined 9 percent year-on- year to 49,108 visitors from 53,827 visitors in March quarter 2010, the lowest quarterly level since June quarter 2008.

Both air and cruise-ship visitor arrival fell in the quarter and over the year despite an expected increase during this quarter of each year.
18 QUARTERLY ECONOMIC REVIEW MARCH 2011 Figure 17: Non-Resident Visitor Arrivals (Thousands of Visitors; Quarterly Data) No' 70 000 Cruise Ship Visitors Air Visitors Total 60 50 40 30 20 10 Inflation The inflation rate, as measured by the Consumer Price Index (CPI), declined 0.4 percent over the March quarter 2010, resulting from a decline in prices for Luganville by 1.3 percent and Port Vila by 0.1 percent.
The major categories contributing to the decline in prices in the quarter included: food (-1.0%), drinks & tobacco (-1.0%), housing & utilities (-0.2%), household supplies (-0.4%) and miscellaneous (-0.1%) primarily due to reduced price for some local fruit and vegetables which more than off-set the price increase in education (3.4%), health (1.1%), transport (0.1%) and recreation (0.1%).

No change in price was shown for clothing & footwear and communication.
000sNo' 70 000 60 50 40 30 20 10 In annual terms the CPI rose 0.7 compared to March quarter of 2010, down from 3.4 percent in the previous quarter.

Port Vila recorded an increase of 0.7 percent and Luganville recorded 0.6 percent.
The expenditure groups contributing to increases over the year included food (0.6%), housing & utilities (1.0%), education (3.5%), drinks & tobacco (1.1%), transport (1.0%), communication (0.2%) and health (0.6%) with price declines (-0.5%), for household recreation (-0.8%), clothing & footwear(-0.2%) and miscellaneous (-0.2%) supplies shown Figure 18: Consumer Price Index (Percentage Change; Quarterly Data) Quarterly Year-ended % 6 5 4 3 2 1 0 -1 -2 % 6 5 4 3 2 1 0 -1 -2 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Source: VNSO 0 0 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Source: National Statistics Office Air visitors declined 40 percent compared to the previous quarter to 15,792 visitors, with 15,505 visitors to Port Vila and 287 visitors to Luganville.
A decline was recorded for holiday visitors and visitors visiting friends/relatives, whilst for arriving trips rose.

All major business/conference related markets recorded decline in the quarter led by Australia (-39%), New Zealand (-46%), Other Countries (-33%), Europe (- 23%), North America (-40%) and Other Countries (- 0.4%).
(-42%), New Caledonia visitors Compared to the March quarter of 2010, air visitor arrivals fell by 21 percent shown for all major markets, by purpose of visit mainly led by holiday visitors, with the exception to increases in visitors visiting friends and families Major markets showing declines over the year were Australia (-15%), New Caledonia (-30%), New (-36%), North Zealand America (-9%), Europe (-12%), Other Countries (-23%) and Japan (-9%) The seasonally-adjusted air arrival series declined 26 percent in the quarter.
(-27%), Other Countries There were 18 cruise-ship visits to Port Vila during the quarter, with various en-route calls to outer ports of Mystery Island (9), Wala Island (5) and Champagne Bay (3) and Luganville-Santo (1) shared amongst the P&O cruise fleet: Pacific Dawn (made 7 calls to Port Vila), Pacific Jewel (5), Dawn Princess (4) and Pacific Sun (2).
These cruise-ship visits brought in 33,316 visitors, representing a decline of 19 percent over the previous quarter and 2 percent over the March quarter of 2010.

19 QUARTERLY ECONOMIC REVIEW MARCH 2011 3.2 FISCAL OPERATIONS 3.2a.

Government Revenues Of total revenue collected, recurrent revenue for the period made up 76.8 percent, while grants from abroad made up the remaining 23.2 percent.
Recurrent revenue includes tax and non-tax revenue while grants are those funds received from donor partners, mainly for development projects.

Figure 20: Fiscal Revenue (Contribution to Year-Ended growth**) Total revenue including grants recorded in the quarter was VT4,363.5 million, representing an increase of 21.2 percent over the previous quarter but a decline of 1.9 percent compared to collection in the same quarter of 2010.
The increase over the quarter was due to an increase collection of tax revenue, which was 11.0 percent higher than in the previous quarter, and higher grants received.

Over the year, the drop was mainly attributed less grants received from abroad compared to same period of 2010. to Total expenditure and net lending made during the quarter stood at VT3,867.6 million, representing declines of 24.6 percent and 5.3 percent over the quarter and year respectively.
This decline was driven mainly by reduced development expenditures.

Over the quarter recurrent expenditures declined, but compared to same period of 2010 were higher by 11.4 percent.

The reduced recurrent expenditures over the quarter reflect the Government’s commitment to control expenditures during this quarter.
Figure 19: Government Budget Balance (Levels; Billions of Vatu; Quarterly Data) Total recurrent revenue for the quarter was VT3,353.0 million, representing increases of 7.8 percent and 6.6 percent over the previous quarter and same quarter of 2010 respectively.

These increases were driven by tax revenues.

Tax revenue collected during the quarter amounted to VT3,131.3 million, making up 93.4 percent of total recurrent revenue.
This is an increase of 11.0 percent over the quarter and 6.9 percent over the same period of the previous year.

Of total tax revenue collected, property tax made up 2.8 percent at VT86.9 million, a significant drop over the quarter and same period of the previous year.

Tax on international trade, consisting mainly of import duties, dropped 20.3 percent and 3.3 percent over the quarter and same quarter of 2010 respectively to be recorded at VT618.0 million, representing 19.7 percent of total tax revenue.
As a result, the fiscal position for the period was a surplus of VT495.9 million, a VT125.4 million increase compared to surplus made in the first quarter of 2010.

The Government ran a fiscal deficit for the three intervening quarters.

20 QUARTERLY ECONOMIC REVIEW MARCH 2011 The major component of tax revenue is taxes on the use of goods.

Taxes on the use of goods increased 24.8 percent and 11.4 percent compared to the previous and same quarter of 2010 respectively.
Total registered collection from taxes on the use of goods was VT2,426.4 million, which is equivalent to 77.5 percent of total tax revenue.

Figure 21: Taxes on the use of goods (Levels; Millions of Vatu; Quarterly data) 3.2b.

Government Expenditures Total expenditure and net lending recorded for the quarter was VT3,867.6 million.

This is a decrease of 24.6 percent over the previous quarter and a decline of 5.3 percent over the same period of 2010.
Of this amount, recurrent expenditure accounted for 87.4 the remaining 12.6 percent under percent, with development expenditure.

The decline total expenditure reflected lower development expenditure, lower recurrent expenditure, and the fact that there was a VT400 million non-recurrent transfer to a Government body in the previous quarter.
in Total recurrent expenditure for the period stood at VT3,380.4 million, a decrease of 10.2 percent compared to previous quarter but 15.1 percent higher than levels spent in the same quarter of 2010.

The decline over the last quarter was mainly due to the Government’s effort to keep spending low as budget 2011 was due to be debated during the quarter.

However, despite the effort, as shown in Figure xx below, recurrent expenditures contributed significantly to year-ended growth in overall expenditures.
Figure 22: Fiscal Expenditure (Contribution to Year-Ended Growth**) Value Added Tax (VAT), a component of taxes on the use of goods, made up 42.9 percent of total taxes on the use of goods at VT1,041.5 million.

This was 9.5 percent less that to preceding quarter but 10.4 percent higher than levels collected in the same period of 2010.

Non-tax revenue dropped 23.7 percent over the quarter to be at around VT221.7 million, equivalent to 6.6 percent of total recurrent revenue.
This was 2.6 percent higher than collection made in the same period of 2010.

Total grants received were VT1,010.3 million, representing an increase of 106.3 percent over the fourth quarter of 2010, but a 4.9 percent decline from the same period of 2010.

Of the total recurrent expenditure made in the quarter, spending on goods and services accounted for 72.9 percent at around VT2,464.7 million, of which salaries & wages made up VT1,550.6 million.

21 QUARTERLY ECONOMIC REVIEW MARCH 2011 3.2c.


Financing During the quarter, the fiscal recurrent budget position was a deficit of VT27.4 million, representing an large deficits improvement encountered since June quarter of 2010.

In the previous quarter, a VT652.0 million deficit was noted.

series of from the Figure 24: Fiscal Recurrent Position (Millions of Vatu; Quarterly Data) Total outstanding Government bonds as at the end of March quarter 2011 were VT3,285.0 million.
VT200 million in bonds matured during the period and were rolled over to finance expenditure.

Figure 25: Outstanding Government Bonds (Bond Holders; Levels; Quarterly Data) Payments of interest for both external and domestic borrowings totaled to VT87.0 million.

This represented an increase of 55.5 percent and a decline of 2.7 percent compared to the previous quarter and same period of 2010 respectively.
The bulk of these interest payments were attributed to payment to domestic borrowings which matured and were rolled over in the quarter.

During the quarter, subsidies and transfers to grant bodies totaled to VT731.2 million, representing 21.6 percent of total recurrent expenditures.

Of this amount, VT55.1 million was to provinces & municipalities.

transfers Acquisition of fixed capital assets totaled to VT97.5 million, representing 2.9 percent of total recurrent expenditures.
Figure 23: Recurrent Expenditure (Contribution to Year-Ended Growth *) Total development expenditures made during the quarter added up to VT487.2 million, equivalent to 12.6 percent of total expenditure for the period.

This was a decrease of 49.6 percent and 53.4 percent compared to the previous quarter and same quarter of 2010 respectively.
22 QUARTERLY ECONOMIC REVIEW MARCH 2011 3.3 MONETARY DEVELOPMENTS Determinants of Money Supply Summary Net Foreign Assets (NFA) Broad Money supply (M2) decreased by 1.2 percent during the March quarter, to reach VT55, 853.2 million, following an increase of 2.1 percent recorded during the previous quarter.

The year-ended change in M2 to March was a decline of 3.0 percent, as compared to the 6.0 percent decline recorded over the year to December 2010.
The decrease in the quarterly growth rate was driven mainly by the banking system’s net foreign assets, which outweighed the increase in the domestic credit.

Figure 26 shows the year-ended growth of money supply (M2) up to the March quarter.

Domestic credit maintained a positive growth over the year whilst NFA exhibited a persistent downward trend.
Figure 26: Determinants of Money Supply (Percentage Change; Year-on-Year Growth) 50 % 40 30 20 10 0 -10 -20 -30 -40 NFA M2 Domestic Credit 50 % 40 30 20 10 0 -10 -20 -30 -40 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Source: Commercial Banks; Reserve Bank Commercial banks’ liquidity1 holdings increased during the quarter; an increase in the amount of RBV Notes outstanding outweighed a decrease in excess reserves.
Excess reserves decreased to VT2.6 billion at the end of the March quarter from 3.1 billion recorded in December.

Commercial banks’ lending and deposit interest rates declined during the quarter.

The Reserve Bank’s rediscount rate was maintained at 6.00 percent throughout the quarter.

1 Commercial banks’ liquidity consists of commercial banks’ excess reserves plus holdings of RBV Notes.
23 Total NFA of the banking system declined by 5.8 percent during the March quarter and by 31.2 percent for the year to the March quarter.

The quarterly decline stemmed from a 16.9 percent fall in the NFA holdings of commercial banks, which outweighed a 2.8 percent increase in the NFA holdings of the Reserve Bank.
Figure 27: Net Foreign Assets (Percentage Change; Year-on-Year Growth) 60 % 40 20 0 -20 -40 -60 -80 Total Commercial Banks Reserve Bank 60 % 40 20 0 -20 -40 -60 -80 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Source: Commercial Banks; RBV The increase in the NFA holdings of the Reserve Bank reflected a decrease of 7.6 percent in its gross foreign liabilities and an increase of 0.9 percent in gross foreign assets.

Overall, the RBV’s NFA position recorded positive growth of 2.8 percent over the quarter.
The declining trend in commercial banks’ NFA, witnessed since 2009, continued in the March quarter.

The quarterly decline in NFA resulted from an 11.4 percent decrease in the commercial banks’ foreign assets outweighing a 7.1 percent decrease in their foreign liabilities.

Over the year, commercial banks’ recorded a 31.3 percent decline in foreign assets and an 8.8 percent increase in foreign liabilities.
QUARTERLY ECONOMIC REVIEW MARCH 2011 Domestic Credit Domestic credit expanded by 1.7 percent during the reviewed quarter and 15.2 percent over the year to March 2011.

The growth in the quarter was due primarily to an increase in loans to the private sector.

Net claims on Government, loans to non-financial public enterprises, and municipalities recorded declines during the quarter.
Growth in total loans and advances2 extended to the private sector in the reviewed quarter was 2.0 percent, as compared to 3.3 percent recorded during the December quarter.

The annual growth for the year to March slowed to 9.3 percent from 9.9 percent recorded over the year to the previous quarter (Figure 28).

Total business lending increased by 4.1 percent and 2.3 percent over the quarter and over the year respectively.
Loans to individuals & households decreased by 0.9 percent over the quarter but increased by 22.9 percent over the year to March.
Figure 28: Private Sector Credit (Year-On-Year Growth; By Categories) 80 % 60 40 20 0 -20 -40 80 % 60 40 20 0 -20 -40 Loans & advances to Business Total Loans & advances to Individual / Households Mar-07 Mar-08 Source: Commercial Banks; Credit Corp; RBV Mar-09 Mar-10 Mar-11 During the quarter, the tourism, construction, housing & land, and personal largest contributions to the year-on-year increase in private sector credit.
The mining & quarrying, entertainment & categories made 2 Includes data from the commercial banks and RBV.

24 services, public utilities, catering, professional institutions manufacturing, categories made smaller contributions during the quarter.

The remaining categories made negative contributions to the annual growth rate (Figure 29).
transport, and financial Figure 29: Contributions to Growth in Private Sector (Contribution to Year Ended Growth; By Sectors) 50 % 40 30 20 10 0 -10 50 % 40 30 20 10 0 -10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Manufacturing Tourism Transport Construction Profesional & Other services Distribution Housing & Land Loans Personal Loans Miscellaneous Other Sectors Agriculture Total Other Sectorsinclude: Fisheries, Mining & Quarryng, Entertainment & Catering, Public Utilities, Government, Public Corporation, Financial institutions Commercial banks’ lending to non-financial public enterprises declined by 2.3 percent and 9.7 percent during the quarter and over the year respectively.
Loans to municipalities also decreased by 48.7 percent and 30.3 percent during the March quarter and over the year to March 2011.

The government’s net credit position vis-à-vis the banking system improved in the March quarter.

This resulted from a VT184.3 million decline in the Reserve Bank’s net claims on the Government outweighing a VT33.2 increase in the commercial banks’ net claims.
Over the year to March 2011, the government’s net credit position with the banking system deteriorated, driven largely by its deteriorating position with the Reserve Bank.
QUARTERLY ECONOMIC REVIEW MARCH 2011 Figure 30: Net Claims of Vanuatu Government (Vis-à-vis the Total Banking Sector; Billions of Vatu) Figure 31: Money Supply Components (Percentage Change; Year-on-Year Growth) Bvt 1 0 -1 -2 -3 Total Commercial banks (net) Reserve Bank (net) 1 Bvt 0 -1 -2 -3 -4 Mar-07 Mar-08 Mar-09 Mar-10 -4 Mar-11 Source: Commercial Banks, RBV Measures of Money Supply The overall decrease in money supply (M2) during the quarter resulted from a 5.7 percent decrease in narrow money (M1), which outweighed a 1.6 percent increase in quasi-money.
Over the year to the March quarter, M2 declined by 3.0 percent, driven a 4.8 percent decline in quasi-money which outweighed a 0.2 increase in the narrow money (Figure 31).

The quarterly decrease in M1 was attributed to decreases in demand deposits and currency outside banks by 4.9 percent and 8.8 percent respectively.

The decrease in demand deposits resulted from decreases from both local and foreign currency components, by 6.1 percent and 3.5 percent respectively.
30 % 25 20 15 10 5 0 -5 -10 -15 M2 Quasi-Money M1 30 % 25 20 15 10 5 0 -5 -10 -15 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Source: Commercial Banks, RBV The quarterly increase in quasi-money resulted from a 5.0 percent increase in savings and time deposits denominated in local currency, which outweighed the decrease of 5.4 percent in fixed and saving deposits denominated in foreign currency.

The annual growth in quasi-money remained negative at -4.8 percent.
Interest Rates The weighted average interest rate on deposits increased to 2.52 percent during the quarter from 1.75 percent in the previous quarter.

However, the weighted average interest rates on fixed deposits declined to 4.59 percent from 5.25 percent in the previous quarter.

Lending rates decreased during the quarter, with the weighted average interest rates on total bank loans decreasing to 9.73 percent from 10.99 percent in the previous quarter (Figure 32).
The spread on commercial banks’ interest rates decreased to 7.21 percent from 9.2 percent in the previous quarter.
25 QUARTERLY ECONOMIC REVIEW MARCH 2011 Figure 32: Interest Rate Spreads (Spread between Average Lending and Deposit Rates) 3.4 MONEY MARKET DEVELOPMENTS Open Market Operations 10 % 9 8 7 6 10 % 9 8 7 6 Commercial banks’ excess reserves peaked at over VT3.8 billion at the first half of January 2011 but fell back to around VT2.6 billion at the end of the March quarter, mainly in response to open market operations.
Figure 34: Bank Excess Reserves (Levels; Millions of Vatu; Month-End Data) 5 Mar-05 Source: Commercial banks Reserve Money Mar-08 5 Mar-11 Reserve money3 decreased by 8.3 percent during the reviewed quarter.

However, over the year to March 2011, it increased by 3.2 percent.

The quarterly decrease was due to decreases in currency in circulation and commercial banks’ excess reserves, while the SRD increased by 2.0 percent in the quarter (Figure 33).
Figure 33: Components of Reserve Money (Levels; Billions of Vatu) 6 Bvt 5 4 3 2 1 6 Bvt 5 4 3 2 1 Currency in circulation Excess Reserves SRD 0 Mar-09 Source: Commercial Banks; RBV Mar-10 0 Mar-11 3 Reserve Money or ‘Base Money’ is comprised of currency in circulation, Statutory Reserve Deposits (SRD), and Excess Reserves.

26 At the end of the March quarter of 2011, total outstanding RBV Notes rose to VT2.2 billion from VT1.25 million at the end of the preceding quarter.
This represents a net increase of VT950 million over the quarter.

Over the period, the Bank floated VT5.25 billion in RBV Notes and received VT8.65 billion in bids from commercial banks.

Of that amount, VT5.6 billion was accepted.

The Bank redeemed VT4.04 billion RBV Notes over the quarter.
The yields on all maturity terms of RBV Notes remained low at below 2 percent, a situation maintained over the last twelve consecutive months, reflecting the excess liquidity in the system and the intensity of competition for RBV Notes.

The yield for 7-Day, 14-Days and 28- Days remained below 1 percent over the period.
QUARTERLY ECONOMIC REVIEW MARCH 2011 Figure 35: 91-days RBV Notes Yield (Percentage; Quarter-End Data) Figure 36: Domestic Banks- Asset Position (Levels; Billions of Vatu) 3.5 BANKING SECTOR DEVELOPMENTS Domestic Banks - Statement of Financial Position March 2011 showed a marginal drop in the industry’s total assets by 0.65 percent to VT81.7 billion, driven by a 9.7 percent drop in total foreign assets to VT22.8 billion.
The drop in total foreign assets outweighed 3.4 percent increase in total domestic assets to VT58.8 billion during the reviewed quarter.

The drop in total foreign assets is attributed to an 11.1 percent drop in balances due from banks and financial institutions outside Vanuatu to VT20.2 billion.
The declining trend in the total foreign assets of the industry is mainly related to de-risking exercise of a few commercial banks in terms of strengthening their know- your-customers factors include the tax information agreements and the global financial crisis, which also contributed to the negative trend.
On the other hand, the growth in total domestic assets is attributable to increases in claims on the private sector, claims on RBV, and other domestic assets by 2.0 percent to VT44.7 billion, 10.0 percent to VT7.0 billion and 13.0 percent to VT5.0 billion, respectively.

requirements.

Other (KYC) On the liability side, total liabilities (less capital) also declined by 1.3 percent to VT70.8 billion over the quarter.
The quarterly drop reflected a decline in both the total domestic liabilities and total foreign liabilities by 0.6 percent to VT55.1 billion and 3.9 percent to VT15.8 billion respectively.

Capital The issuing of the revised prudential guidelines on capital adequacy for banks by the RBV, effective beginning of 2011, impacted the overall capital position of the industry at the end of March 2011 (Figure 37).
The guideline further enhances the quality of capital held by banks and considers operational risk in addition to the traditional credit risk focus.

The industry’s total risk weighted assets depicted a significant 66.1 percent increase quarter-on-quarter to VT48.3 billion, mainly reflecting the revised risk weighting procedure.

The total capital base increased by 5.2 percent to VT9.4 billion.
This mainly reflected the 256.7 percent increase in tier 2 capital to VT1.2 billion, outweighing 4.4 percent drop in tier 1 capital to VT8.2 billion.

The industry’s capital adequacy ratio was maintained above the new regulatory threshold of 12.0 percent at 19.4 percent.

Tier 1 capital to total risk weighted asset ended comfortably at 17.0 percent.
27 QUARTERLY ECONOMIC REVIEW MARCH 2011 Figure 37: Capital Adequacy & Tier 1 Ratio (Quarterly Data) Figure 38: Domestic Banks- Earnings (Billions of Vatu; Quarterly Data) Statement of Financial Performance financial industry’s performance The remains satisfactory despite recording lower profits during March 2011 quarter (Figure xx).

Total gross operating profit declined quarter-on-quarter by 16.3 percent to VT538.1 million.
The decline was a result of a decline in total operating income by 3.8 percent to VT1.9 billion and 2.0 percent increase in total operating expenses to VT1.4 billion.

The industry’s net operating income dropped by 8.4 percent to VT456.0 million after allowances for provisions, general reserves and write-offs of VT0.2 million, VT0.8 million, and VT81.1 million respectively.
The drop in earnings impacted on the industry’s ROA and ROE, reducing them from 0.8 percent (Dec-10) to 0.7 percent, and 6.2 percent (Dec-10) to 5.1 percent respectively at the end of the reviewed period.

Asset Quality The reviewed quarter saw further deterioration in the quality of the industry’s lending portfolio, increasing substandard loans and impaired assets by 142.3 percent to VT1.9 billion and 1.2 percent to VT2.3 billion respectively.
The increase in impaired assets was driven by a few loans being downgraded to the loss category, increasing loans in the category by 11.9 percent to VT411.5 million.

The industry’s aggregate standard loans declined by 0.9 percent to VT41.9 billion, reflecting the degrading of few major loans during the reviewed period.

Net non-performing loans to capital and reserves marginally increased from 14.5 percent (Dec-10) to 15.0 percent, confirming the deterioration.
However, overall the quality of the industry’s lending assets remained healthy with 91.0 percent comprised of standard loans (Figure 39).

Furthermore, capital and reserves against the non-performing loans of the industry continued to remain strong.

Total securities against the loans maintained a satisfactory level having increased by 2.9 percent to VT29.4 billion at the end of March 2011 quarter.
28 QUARTERLY ECONOMIC REVIEW MARCH 2011 Figure 39: Domestic Banks- Asset Quality (Share of Total Loans; By Loan Category) Overall private sector credit was maintained at comfortable level, however with high a concentration (48.2 percent) of credit to the personal sector (Figure 40).

Total foreign currency loans increased over the period by 7.4 percent to VT9.1 billion.

The increase represents 30.0 percent growth year-on-year.
Figure 40: Domestic Banks- Private Sector Credit (Share of Total Loans; By Industry; Quarterly Data) Private Sector Lending Liquidity and Funding The industry’s vatu liquidity as measured by the liquid asset ratio (LAR) continued to remain strong at the end of March 2011 at 16.8 percent, increasing from 16.5 percent at the end of the previous quarter (Figure 41).
This generally reflected improvements in the LAR position of the majority of the commercial banks well above the 7.0 percent regulatory requirement.

The industries foreign currency liquidity remained tight over the quarter.

Total private sector lending increased by 0.5 percent to VT45.0 billion over the reviewed period, representing a slowdown from the previous quarter.
The increase was contributed by increases in lending to the mining and quarrying sector (4.8 percent to VT128.2 million), the manufacturing sector (7.2 percent to VT1.8 billion), the tourism sector (11.8 percent to VT4.5 billion), the transport to VT1.6 billion), entertainment & catering, the financial sector (197.2 percent to VT639.1 million), and the professional & other sector (17.3 percent to VT2.4 billion).
(8.0 percent sector On the other hand, contractions in loans were recorded for the agriculture sector (1.9 percent to VT791.9 million), the fisheries sector (17.0 percent to VT49.1 million), the distribution sector (8.8 percent to VT3.1 billion), the public utilities sector (1.5 percent to VT36.9 million), the construction sector (7.7 percent to VT6.8 billion), the government sector (5.5 percent to VT26.3 million), personal (0.2 percent to VT21.7 billion), and miscellaneous (29.3 percent to VT1.1 billion.
29 QUARTERLY ECONOMIC REVIEW MARCH 2011 Figure 41: Domestic Banks- Liquid Asset Ratio (Percent; Quarterly Data) International Banks Financial position The offshore banking industry recorded growth of 3.7 percent in total assets during the quarter to US$110.3 million.

The positive growth is attributable to growth in Cash items by 11.3 percent to US$81.6 million, outweighing a 15.4 percent drop in Loans and Advances to US$25.9 million.
The largest component of the offshore industry’s assets at the end of the first quarter was cash items, which accounted for 74.0 percent of total assets.

Figure 43: Offshore Banking Industry– Total Assets (Millions of USD; Quarterly Data) Foreign Exchange Turnover The industry’s monthly total foreign exchange turnover contracted by 25.5 percent to VT4.9 billion compared to end of previous quarter, driven mainly by a 28.5 percent drop in foreign exchange turnover against the vatu.
Total foreign exchange turnover against USD and that from cross currencies exchanges were 2.9 percent and 27.1 percent higher than at the end of the previous period at VT570.9 million and VT37.7 million respectively.

Figure 42: Domestic Banks- Foreign Exchange Turnover Position (Billions of Vatu; Quarterly Data) On the liabilities side, total liabilities reported growth of 3.7 percent to US$104.3 million (Dec-10: USD97.

9 million).
9 million).

This reflects 5.5 percent growth in deposits to US$100.0 million (Dec-10: US$94.8 million).

Deposits accounted for 95.8 percent of total liabilities (less capital).

Earnings The industry reported a net profit of US$ 90 thousand at the end of the March quarter; 43.8 percent lower compared to December 2010 profit of US$190 thousand.

This represents year-on-year drop of 1.1 percent.


Net-interest income fell by 60.9 percent to US$113 thousand (Dec-10: US$289 thousand), and non-interest income fell by 78.9 percent to US$320 30 QUARTERLY ECONOMIC REVIEW MARCH 2011 thousand (Dec-10: US$1.5 million).

Total operating expenses also declined 59.6 percent to US$480 thousand (Dec-10: US$1.8 million).

The low earnings performance in the first quarter is likely to improve in the second quarter.
Figure 44: Offshore Banking Industry– Earnings (Thousands of USD; Quarterly Data) Figure 45: Offshore Banking Industry- Capital (Millions of USD and Percent; Quarterly Data) Capital The industry’s capital base declined 29.3 percent to US$6.0 million (Dec-10: US$8.4 million), reflecting a decline in issued and paid up capital and retained earnings by 26 percent to US$4.3 million and 28 percent to US$1.5 million respectively.

The industry’s capital base is entirely comprised of Tier 1 capital.
Total risk-weighted assets declined 6.6 percent to US$37 million, reflecting a decline in loans and advances over the quarter.

The industry’s capital adequacy ratio fell to 15.9 percent, but remained above the regulatory 12 percent requirement.

3.6 BALANCE OF PAYMENTS The provisional balance of payments for the March quarter 2011 recorded a surplus of VT187 million.

The current account deficit increased by 56 percent due to significant reductions in official grants and services income.
However, this expansion in the current account deficit was financed by the capital and financial accounts, which recorded surpluses, reflecting growth in other investment assets and capital investment grants.

An outflow of around VT364 million was not captured in the statement, and therefore was recorded as errors and omissions.

31 QUARTERLY ECONOMIC REVIEW MARCH 2011 Table 3: Balance of Payments Summary (Billions of Vatu; Quarterly Data) Bank’s minimum threshold level of 4 months of import cover.
Q409 (6,117) Q110 (4,360) Q210 (3,922) Q310 (5,264) Q410 (5,075) Figure 47: Reserves and Months of Import Cover (Billions of Vatu and Months; Quarterly data) Balance on trade in goods Exports f.o.b Imports f.o.b Balance on trade in services Services credit Services debit Balance on primary income Primary income credit Primary income debit Balance on secondary income Secondary income credit Secondary income debit Balance on current account Balance on current account (excluding reinvested earnings) Balance on capital account Financial account Financial assets Financial liabilities Level of official reserves at end of period 1,598 (7,715) 3,612 698 (5,058) 3,027 1,344 (5,266) 3,471 1,459 (6,723) 4,089 1,408 (6,483) 3,806 6,894 (3,282) (330) 5,843 (2,816) (299) 6,372 (2,902) (428) 7,367 (3,277) (912) 7,094 (3,287) (302) 915 (1,245) 645 986 (1,285) 571 826 (1,254) 697 849 (1,761) 587 880 (1,183) 390 687 (42) (2,190) 620 (49) (1,061) 740 (43) (183) 744 (157) (1,500) 462 (72) (1,181) (1,634) (329) 571 (485) (281) 1,003 787 912 180 165 (8,088) (9,694) 14,554 (1,538) (2,045) 14,986 (307) (526) 15,508 (3,404) (1,741) 15,312 (1,715) (422) 15,035 Figure 46: Quarterly Current Account Balances (Millions of Vatu) At end March 2011, foreign exchange reserves were sufficient to finance 6.9 months of imports, up from the 5.8 months in December 2010.
This was well above the 32 VTb 14 12 10 8 6 4 2 8 mth Mths 6 4 2 0 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 0 Source: RBV NET FX (LHS) IMPORT COVER (RHS) Merchandise trade The provisional trade deficit narrowed due to a 17.1 percent decline in imports which more than offset the decline in exports.
The majority of major import items recorded decreases in the quarter including: crude materials (30 percent), beverages and tobacco (44 percent), chemicals (20 percent) and transport and equipment (18 percent).

As most of Vanuatu’s imports come from Australia, increasing cost as a result of the appreciation of the Australian dollar during the March quarter may have been a contributing factor to a decline in import demand.

in global demand resulting Export earnings were down slightly by 3.5 percent.
The gradual recovery in improvement of commodity prices did not appear to offset the negative impact of the depreciating US dollar on Vanuatu exports, as most exports are sold in US dollars.

In addition, significant reductions in exports of cocoa (-93 percent) and kava (-40 percent) more than offset the increases in the other major export items.
QUARTERLY ECONOMIC REVIEW MARCH 2011 The Balance of Payments impact of New Zealand’s RSE Scheme on Vanuatu Since the introduction of New Zealand’s Recognised Seasonal Employment (RSE) scheme in Vanuatu in 2008, approximately 3,000 workers have signed up for contracts under different agents, working for different employers in the horticulture and viticulture industries in New Zealand.

Vanuatu has benefited enormously through the scheme, in particular the remittances earned by the workers.
The wages earned by the workers, as remittances, have been a major source of foreign exchange for the economy.

Inflows from RSE Workers (Millions of Vatu; Monthly Data) In Vanuatu’s Balance of Payments (BOP) statement, workers’ earnings from RSE are recorded in the Current Account (under Primary Income).

Workers’ remittances in general measure the transfer of money by a foreign worker to his or her country of origin.
From the balance of payments perspective, this is recorded on the Primary Income Account under the principle of residence, whereby a person living in a country for more than a year is regarded as a resident, whilst a person living in a country for less than a year is regarded as a non-resident.

Since these ni-Vanuatu workers are only temporarily working abroad, meaning in New Zealand for less than a year, they are regarded as residents of Vanuatu.
The BOP measures transactions between residents and non-residents, and so does from Vanuatu- not capture resident workers in New Zealand back to Vanuatu.

However, the money they earn from their New Zealand employers is a resident to non-resident transaction, and is therefore captured in the BOP under the Income Account of compensation of employees.

The Primary Income Account comprises investment income and compensation of employees.
Compensation of employees includes the income received by residents working abroad temporarily as well as residents employed by international organisations in Vanuatu and short term non- resident workers in Vanuatu.

RSE income has come to contribute more than 50 percent of the total compensation of employees income received from the rest of the world, and on average 24% of the total income receipts from abroad.
they work transfers As Figure A shows, whilst inflows from RSE workers have been volatile over the duration of the scheme, the month of March 2011 recorded the highest monthly inflow on record.

The peak inflows shown can be explained by the high number of additional employees recruited over the first quarters of 2010 and 2011.

Conversely, the trend of low inflows in late 2008 and 2010 is the result of the decline in the stock of labour being employed during the respective seasons.
Since the scheme began, cumulative inflows from RSE workers are estimated to have exceeded VT2.5 billion.

Changes in New Zealand legislation are expected to result in increased earnings for workers taking part in the RSE scheme; effective from April 2011, the workers’ minimum wage will increase, whilst the personal tax rate is to be lowered.
These amendments are likely to boost remittances earnings into the Vanuatu economy over the course of the year, assuming that the stock of participating labour remains stable.

Increases in remittances would show in the Primary Income Account of the BOP, in particular increasing income from compensation of employees.
33 QUARTERLY ECONOMIC REVIEW MARCH 2011 Services Account Capital and Financial Account reflecting The surplus in the services account contracted by 55 percent over the the March quarter, significant decrease in both the number of air visitors and day visitors, which decreased tourism earnings.
The majority of tourists to Vanuatu originate from Australia, but any increase in average spending as a result of the appreciation of the Australian dollar against the vatu over the quarter did not appear to offset the reduction in arrival numbers.

Figure 48: Tourism Earnings (Billions of Vatu; Quarterly Data) Income Primary – The net income deficit increased over the quarter due to an increase in payment of inter- company loans.
Foreign direct investment reinvested earnings and distributed branch profits remained the dominant factors that offset the interest received in the quarter, causing the income account to remain in deficit.

The RSE inflows showed an increase by 73 percent to VT142 million, reflecting increases in the stock of labour over the period.

Secondary – The secondary account, which consists of current transfers, showed a decrease of 37 percent over the quarter, reflecting less donor grants during the quarter.
Official donor grants continued to dominate the secondary income account.

34 The March quarter saw a boost in the capital account by 80 percent reflecting an increase of the funding of long term government projects by major donors.

The capital account is expected to remain in surplus with the ongoing funding of projects in the economy.
The financial assets of the financial account increased by 26 percent from its low level in the previous quarter due to a significant increase in currency, deposits, and other securities.

Conversely, liabilities reduced due to reductions in foreign loan repayments.

International Investment Position At the end of March 2011, Vanuatu’s International Investment Position (IIP) showed an increase in its net borrowing to VT16,087 million from VT14,209 million in December 2010.
The new position reflected a reduction in the assets of other sectors offsetting the increase in liabilities.

3.7 EXCHANGE RATE DEVELOPMENTS The development of the Vanuatu vatu vis-à-vis the major currencies is reflected in the development of our major trading partners’ economies and currencies.
Table 4: Exchange Rate of the Vatu against Major Partners’ Currencies Vatu/USD Vatu/AUD Vatu/NZD Vatu/EUR Mar-11 91.89 94.88 70.02 129.82 1 month ago %▲ 93.09 1.3 3 months ago 93.15 %▲ 1.4 12 months ago 98.05 %▲ Note: (-) appreciation of vatu 6.3 94.49 -0.4 74.72 -0.2 90.06 -5.4 69.80 -0.3 71.84 2.5 69.60 -0.6 128.07 -1.4 123.75 -4.9 131.55 1.3 the March quarter, Over the US dollar further depreciated against vatu by 1.4 percent.
Conversely, The Australian dollar (AUD), New Zealand dollar (NZD) and Euro appreciated against the vatu by 0.4 percent, 0.3 percent and 1.4 percent respectively.

The Federal Reserve maintained its monetary policy interest rate throughout the quarter (at 0-0.25 percent QUARTERLY ECONOMIC REVIEW MARCH 2011 since December 2008), whilst also implementing a second round of quantitative easing.

GDP growth slowed to an annualized rate of 1.9 percent during the quarter.
The economy was helped by an improvement in exports, itself supported by depreciation in the dollar.

Figure 49: Exchange Rate against USD and AUD (Indices; September 2006=100) INDEX 115 110 105 100 95 90 85 80 Vatu/AUD Vatu/USD 115 INDEX 110 105 100 95 90 85 80 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 The Australian economy shrank by 1.2 percent in the continued March quarter.

However, appreciate against other currencies, including vatu, supported by the continued high prices for Australia’s commodity exports.
The Reserve Bank of Australia left its policy interest rate unchanged over the quarter.

the AUD Figure 50: Exchange Rate against NZD and EUR (Indices; September 2006=100) 120 INDEX 120 INDEX 115 110 105 100 95 90 85 80 Vatu/NZD Vatu/EUR 115 110 105 100 95 90 85 80 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 The Reserve Bank of New Zealand returned its official cash rate at a record low of 2.5 percent, in an effort to support the economy in the wake of the Christchurch earthquake.
However, the appreciation of the NZD was supported by high commodity export prices caused by strong growth in Asian trading partners and investor expectations that monetary policy would need to be tightened as recovery efforts got underway.

In the euro area, concerns about the affordability of sovereign debt in a number of peripheral euro member states continued to add volatility to the currency during the quarter.
Whilst the European Central Bank left its policy rate unchanged through to the end of March, it repeatedly cited the need to control inflationary expectations in light of increasing commodity prices, increasing the likelihood of an imminent rate increase.

Euro area exports continued to be supported by the ongoing expansion in the world economy.

35 QUARTERLY ECONOMIC REVIEW MARCH 2011 NO.

BRIEF DESCRIPTION OF MAJOR EVENTS CHRONOLOGY OF MAJOR EVENTS 1.

2.

3.

4.

5.

6.

8.


The makers of Cachet Chocolates revealed the reason behind their product named “Vanuatu: dark, mysterious and delicious” was that the chocolate bar was made 100% from cocoa beans from Vanuatu, the aim of showing consumers how the taste of a chocolate bar can be different depending on the origin of cocoa used.

The supply agreement was arranged through ACTIV, the trade producers’ group with the main aims of empowering Vanuatu producers to make the most their commodities and processes.
ACTIV has helped three producer groups in cocoa production in Vanuatu.

(Source: Vanuatu Daily Post) The officer in charge of the Department of Tourism in Sanma Province, John Ware, said 2010 was a busier year than 2009, with a higher number of tourist visits and increased tourism investments in Luganville and nearby areas, and a notable increase in involvement of indigenous people in the new investments.
Tourism products available were described as having improved, with particular examples given as the Lewaton Cultural Village and Vilvil Cultural Village, both of which have proved popular.

Two other positive contributors to the tourism sectors in 2010 were the completion of Santo East tar sealed road and resumption of international flights by Air Vanuatu direct to Santo.
(Source: Vanuatu Daily Post) Food crops were destroyed in the islands of Tafea province as a result of destructive winds of over 40 knots experienced in the southern islands from the tropical Cyclone Vania on 12th January.

The Natural Disaster Management Office confirmed that main root crops were destroyed by the wind.

Telecommunication networks were also affected by the cyclone, with reports that a TVL mobile tower in Isangel, Tanna, fell on the Tafea Provincial Council Chambers.
Westpac Vanuatu, in partnership with AusAID, hosted another series of financial literacy workshops in Santo from 17th - 21st January following the success of the workshops run in October 2010.

The aims of the workshops were to improve participants basic more management or business financial skills.
Financial Management, Business Basics and Financial First Steps courses were delivered in Tonga, Vanuatu and Papua New Guinea as part of Westpac’s partnership with AusAID under the Pacific Seasonal Worker Pilot Scheme.

(Source: Vanuatu Daily Post) A report from VANWODS showed that by 2010, the number of savers in VANWODS had increased to 5,592, while the value of savings had reached over VT122 million.
At the end of 2010, the number of borrowers was recorded at 3,449, while the organization has given out over VT113 million in loans.

The organization also announced plans to showcase VANWODS’ achievements during a microfinance Pasifika week in a global micro finance summit in Italy later this year.

(Source: Vanuatu Daily Post) Recognized Seasonal Employment (RSE) workers were expected to earn more money from the RSE following recent changes to New Zealand income and tax laws.
From 1 April 2011, the minimum wage was to increase to NZ$13.00 an hour, while the personal tax rate that applies to RSE seasonal workers was being lowered from 15% to 10.5%.

The changes mean that there will be more money for RSE workers to take home.
Since it began, over 2,500 ni-Vanuatu workers participated in the RSE scheme, collectively injecting above VT2 billion into Vanuatu’s economy (Source: Vanuatu Daily Post) Japan agreed to provide VT92 million through its Non Project Grant Aid (NPGA), which will go towards Health sector, specifically towards the purchase of medicines and medical supplies.
The signing ceremony on the exchange of notes formalizing Japan’s commitment took place at the Ministry of Foreign Affairs between the 36 EFFECTIVE DATE 4th January 2011 4th January 2011 14th January 2010 18th January 2011 18th January 2011 12th February 2011 15th March 2011 QUARTERLY ECONOMIC REVIEW MARCH 2011 9.

10.

Vanuatu Government and the Ambassador Japan to Vanuatu, Yutaka Yoshizawa, on the fourth occasion of Japan’s NPGA assistance to Vanuatu.
(Source: Vanuatu Daily Post) Air Vanuatu Chief Executive Officer Joseph Laloyer announced the airline would offer discounted travel to Santo and Tanna from Vila as part of an Easter Sale.

Flights between Port Vila and Santo were to be cut to VT25,100 return and Vila to Tanna reduced to VT22,290 return with tickets go on sale for one week only from 30th March with travel from 19 to 26 April 2011.
(Source: Vanuatu Daily Post) Santo Roads and Construction Company in Luganville began works on clearing four sites on Malekula before work was to begin installing the power stage of the bio-fuel project.

The four sites are Vao, Atchin, Orab and Wala.

The Project, funded by the European Union and the Vanuatu government, was to be implemented in the provinces of Malampa, Penama and Torba.
(Source: Vanuatu Daily Post) 30th March 2011 31st March 2011 37 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 1: ASSETS OF THE RESERVE BANK OF VANUATU (Millions of Vatu) End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 Foreign Sector Foreign Sector Commercial Banks Public Sector Other Assets Total Assets Foreign Exchange SDR Holdings RTP with IMF Total Claims on Claims on Claims on Total Com/Banks Government NFPE 6,988.5 10,572.2 11,363.4 12,319.3 13,928.0 14,452.5 6,225.4 6,482.8 6,738.2 6,988.5 7,383.3 8,800.9 9,586.7 10,572.1 r 10,410.7 10,468.5 10,654.3 11,363.4 11,162.2 11,241.4 11,710.9 12,319.3 11,577.6 12,162.7 12,387.7 13,928.0 14,362.2 14,882.5 14,686.1 14,452.5 14,586.1 - - - 650.0 - - - - - - - - - - - - - - - - - 650.0 500.0 - - - - - - - - r r 7,342.3
- - - - - - - - - - - - - - - - - - - - 2,109.7
r r QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 2: LIABILITIES OF THE RESERVE BANK OF VANUATU (Millions of Vatu) End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 2008 2009 2010 2011 Q1 Reserve Money Com/Bank's Vault Cash Currency outside Bank's Com/Bank's Deposits with RBV Total Foreign Government Deposits, Liabilities of which Contribution to RTP with IMF Deposits of NFPE RBV Notes Other Liabilities Total Liabilities r r 2,559.1 4,020.4 4,117.7 4,273.3 4,139.1 5,283.5 2,676.5 2,399.3 2,761.9
350.9
245.0 248.2 265.5 217.0 231.1 268.1 223.4 350.9 316.8 275.9 362.7 611.8 164.8 163.4 627.5 3,409.3 2,954.7 2,706.2 2,813.2 2,715.0 2,714.1 - - - - - - - - - - - - - - - - - - - - QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 3: ASSETS OF COMMERCIAL BANKS Reserves Deposits with RBV RBV Notes Total Foreign Assets 1/ Domestic Credit Claims on Claims on Government
 Municipalities Claims on NFPE Inter-bank Claims Total Claims Claims on Private Sector (Millions of Vatu) Other Assets Total Assets End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2007 2008 2009 2010 Vault Cash 4,117.7
969.4 1,038.3 1,320.0 2,559.1 4,020.4 4,117.7 4,273.3 4,138.9 5,283.5 2,676.5 2,399.3 2,761.9 2,559.7 2,816.0 3,641.4 4,028.0 4,020.4 4,925.6 4,793.6 4,087.6 4,117.7 3,810.5 3,441.3 r Q1 1,193.4 4,874.8 6,068.2 2,195.6 19,297.0 1/ Includes small amounts of claims on foreign monetary authorities in the form of foreign currency notes and coins.
r. Revised.
- - - 61.4 - - - - - - - - - - - 813.0
QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 4: LIABILITIES OF COMMERCIAL BANKS Demand Deposits Savings Deposits Time Deposits End of Period Local Currency Foreign Currency Total Foreign Local Currency Currency Total Local Currency Foreign Currency Total (Millions of Vatu) Foreign Liabilities Government Deposits Other Liabilities Total Liabilities 2005 2006 2007
 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 r 4,313.5
16,334.7
r Q1 8,911.9 7,816.3 16,728.2 5,327.6 366.6 5,694.3 18,998.8 10,269.7 29,268.4 11,357.5 599.0 14,260.7 77,908.1 2/ Government deposits in Vatu and Foreign currency.
r. Revised.
41 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 5: MONETARY SURVEY; A CONSOLIDATED STATEMENT OF ACCOUNTS OF THE MONETARY INSTITUTIONS 'Monetary Authorities Foreign Liabilities NET FOREIGN ASSETS(NFA) 'Commercial Banks Foreign Assets Foreign Liabilities r 7,874.8 8,298.8 8,631.9 8,675.5 r 6,591.4 7,366.9 8,540.9 10,438.2 11,071.4 12,210.7 12,226.1 Net Net Total NFA 29,488.2 32,592.7
10,567.5 9,554.4 Total NFA End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 Foreign Assets 7,595.6 11,191.9 11,939.5 12,979.0 14,554.3 15,035.1 6,824.2 7,084.1 7,342.3 7,595.6 7,993.8 9,415.1 10,205.0 11,191.9 10,988.9 11,051.2 11,241.7 11,939.5 11,745.0 11,827.3 12,300.1 12,979.0 r 12,238.7 12,824.4 15,879.5 14,554.3 14,986.2 15,507.9 15,312.0 15,035.1 15,171.1 'Claims on Govt.
(Net) DOMESTIC CREDIT Claims on NFPE 2/ 'Claims on Private Sector 3/ (Millions of Vatu) Claims on Municip- alities Total Domestic Credit (162.5) (697.2) (1,110.3) (3,009.9) (2,970.9) (1,183.0) 551.0 167.3 (43.4) (162.5) (510.4) (670.6) (520.6) (697.2) (815.7) (859.2) (890.5) (1,110.3) (1,571.1) (1,914.9) (2,369.6) (3,009.9) (3,606.6) (3,378.3) (2,982.3) (2,970.9) (3,280.9) (3,211.3) (2,407.9) (1,183.0) r r r r r r 39,358.7 r 39,981.7 41,001.3 42,338.0 42,559.7 r r (1,334.0) 93.2 44,826.0 2/ Including claims on Vanuatu Commodities Marketing Board (VCMB).
3/ Including claims on RBV staff and excluding credit corp 42 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 5: MONETARY SURVEY; A CONSOLIDATED STATEMENT OF ACCOUNTS OF THE MONETARY INSTITUTIONS … continue End of Period Money Currency Demand deposits outside Banks L currency F currency Liquidity Total Time & Sav.

deposit(VT) Quasi-money Time & Sav.
deposit( F C) 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 16,150.1
16,961.7 17,209.9 17,208.2 17,761.4 16,150.1 16,738.5 17,143.0 17,471.2 17,857.6 19,027.4 19,641.8 20,038.2 20,038.2 20,243.6 16,595.7 17,868.7 17,395.9 16,318.1 14,504.5 12,974.7 11,296.4 11,244.5 (Millions of Vatu) Total Liquidity OTHER ITEMS (Net) Total 2/ Including claims on Vanuatu Commodities Marketing Board (VCMB).
3/ Including claims on RBV staff and excluding credit corp 43 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 6: DOMESTIC SUPPLY AND COMPONENTS (Millions of Vatu) End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 Notes Coins Total (1) (2) (1+2) (3) Demand Demand Deposits M1 Currency Deposits of Cash in hand with Public Residents in Vatu in Vatu with (D dV) 1/ (3-4) Banks ( 6 ) ( 5 ) ( 4 ) of Residents in foreign currency (DdF) 2/ ( 7 ) (Narrow Measure) (5+6+7) ( 8 ) Savings & Time Deposits of Residents in Vatu (T dV) ( 9 ) 4,553.3
6,984.5
M2 Savings & Time Deposits of Residents in (Broad foreign currency Measure) (8+9+10) ( 11 ) (TdF) ( 10 ) - 46,131.2 47,823.1 49,979.2 52,907.8 53,858.1 57,384.4 57,718.5 59,872.6 57,103.0 57,649.4 59,633.4 60,145.6 57,565.3 55,744.3 55,396.9 56,551.9 4,701.9 658.8 5,350.7 1,193.4 4,162.3 8,911.9 7,816.3 20,890.5 24,326.4 10,636.3 55,853.2 1/ Excludes deposits of Government but
 includes Vatu deposits on non-reporting (i.e exempt) banks and other institutions held with reporting banks.
2/ Excludes Government deposits and deposits of exempt institutions.

.
44 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 7: DISTRIBUTION OF VATU AND FOREIGN CURRENCY DEPOSITS OF RESIDENTS BY CATEGORIES End of Period 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Vatu Deposits(MVT) 1/ 'Foreign currency Deposits (MVT) 1/ Demand Savings Time Total Demand Savings Time Total Percent Distribution ( % ) Total Foreign Vatu Deposits Currency Deposits Government Depostis (MVT) 2/ 8,564.9
343.0
966.2 632.2 182.4 259.7 379.8 457.3 340.0 343.0 300.9 454.2 461.5 270.8 249.8 352.0 295.8 372.2 339.4 671.7 791.2 784.7 908.1 966.2 1,332.1 1,349.0 622.5 632.2 2011 Q1 8,911.9 5,327.6 18,998.8 33,238.3 7,816.3 366.6 10,269.7 18,452.6 64.3 35.7 100.0 599.0 1/ Excludes deposits of the Vanuatu Government.
2/ Government deposits in Vatu and Foreign currencies.
45 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 8: TIME DEPOSITS IN VATU OF RESIDENTS WITH COMMERCIAL BANKS (Millions of Vatu) End of Up to and incl- Over 7 days and Period and up to 1 month usive of 7 days 1 to 2 Months Maturity Period 2 to 3 Months 3 to 6 Months 6 to 12 Months Over one Year Total 2/ 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2,996
209.9
QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 9: COMMERCIAL BANKS SECTORAL DISTRIBUTION OF LOANS & ADVANCES IN VATU AND FOREIGN CURRENCY (Millions of Vatu) End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Agriculture Fisheries Mining & Manufact- Tourism Quarrying turing Entertain- ment & Catering Transport Public Utilities Construc- tion (a) Govern- ment (b) Public Corporation - 46.4 48.4 102.2 129.9 122.4 5.7 3.4 - - - - 42.5 46.4 46.0 46.0 - 1,523.0
1,504.2
r r r r r r 2005 2006 2007 2008 2009 2010 2011 1/ Non-reporting banks includes Trust companies, Insurances etc.
47 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 9: COMMERCIAL BANKS SECTORAL DISTRIBUTION OF LOANS & ADVANCES IN VATU AND FOREIGN CURRENCY ….
continue (Millions of Vatu) End of Period Financial Institutions Professional & Other Services Housing & Land Purchases Distribution Personal: Others Miscella- neous TOTAL Of which: Vatu Private Government shares & Bonds Bonds Claims on non-repor- ing banks GRAND TOTAL 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 6,880.6
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1/ Non-reporting banks includes Trust companies, Insurances etc.
48 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 10: DISTRIBUTION OF VATU ADVANCES BY INTEREST RATES AS AT END OF MARCH 2011 (Millions of Vatu) RATE OF INTEREST ( % ) Agriculture & Fisheries Mininig & Manufacturing Other Productive Sectors Distribution, Trade & Housing & Land Purchase for 0ther Sectors Owner occupation Other Personal Total Below At At Above 8.00 8.00 8.50 9.00 9.50 10.00 10.50 11.00 11.50 12.00 12.50 13.00 13.50 14.00 14.50 15.00 15.50 16.00 16.50 17.00 17.50 18.00 18.00 TOTAL 0.8 - - 0.1 52.4 3.4 0.1 - 78.7 42.4 - 4.9 0.0 3.7 - 0.0 0.0 0.0 0.0 0.0 0.0 - 0.0 186.6 0.5 2.1 - - 0.8 0.1 11.8 73.0 0.1 4.0 0.0 83.5 0.0 0.0 0.0 - - 0.0 0.0 0.1 0.0 - - 0.1 175.6 0.4 2,212.7 167.5 0.0 65.2 135.9 743.9 110.6 56.9 535.3 52.9 1,075 12.5 9.0 4.6 - - 0.2 0.0 0.0 0.0 0.0 0.0 64.4 5,246.5 12.7 20,639.1 518.2 - 127.9 993.5 143.9 60.5 62.6 619.5 18.5 336 58.9 1.0 36.1 - 0.0 5.5 50.9 0.0 0.0 0.0 - 1.0 23,672.7 57.3 49 6,786.1 89.9 0.0 0.4 1,875.9 14.2 8.0 1.2 9.6 0.2 367 0.1 0.1 3.4 - 6.1 0.0 0.0 2.1 - 0.0 0.0 6.8 9,171.6 22.2 412.3 6.3 - 18.1 148.0 496.2 98.3 8.3 18.5 7.5 1,218 27.1 6.0 159.0 - - 0.2 23.5 0.0 43.6 0.0 0.0 147.8 2,838.2 6.9 30,053.2 781.9 0.1 212.4 3,205.9 1,413.4 350.5 129.1 1,265.6 121.5 3,078.7 103.6 16.1 206.9 - 6.1 5.9 74.4 2.2 43.6 0.1 0.0 220.1 41,291.3 100.0 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 11: SELECTED INTEREST RATES FOR LOCAL COMMERCIAL BANKS 1/ Vatu Deposit Rates 2-6 Months Above 6 months Weighted average rate for Fixed deposits Weighted average rate for Bank deposits Savings 1
 month Foreign Currency Deposit Rates (Aust.
Dollar) 1 month (Locally quoted) Vatu Advance Rates 2/ Local Inter-Bank Rates Commercial Personal Housing Weighted average rate for bank loans Call or Overnight End Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 2008 2009 2010 0.50-2.00 2.00-6.50 0.50-2.00 1.75-4.20 0.50-2.00 1.25-3.50 0.50-3.00 1.25-9.00 0.50-5.00 1.25-8.00 0.50-3.00 1.50-6.00 2.00-7.00 1.75-4.50 1.25-4.50 1.25-9.00 1.25-8.00 1.50-6.50 2.25-7.00 2.75-4.75 2.25-5.50 2.25-9.00 2.25-9.80 2.50-9.00 0.50-2.00 2.00-5.00 0.50-2.00 2.00-5.00 0.50-2.00 2.00-5.00 0.50-2.00 2.00-6.50 2.00-6.00 2.00-5.75 2.00-5.75 2.00-7.00 2.75-7.00 2.25-7.00 2.25-7.00 2.75-7.00 0.50-2.00 2.00-6.50 0.50-2.00 2.00-6.00 0.50-2.00 1.75-5.50 0.50-2.00 1.75-4.20 2.00-7.00 2.00-6.50 1.75-5.00 1.75-4.50 2.75-6.5 2.75-6.50 2.75-5.50 2.75-4.75 0.50-2.00 1.25-3.75 0.50-2.00 1.25-3.50 0.50-2.00 1.25-3.50 0.50-2.00 1.25-3.50 1.25-4.25 1.25-4.25 1.25-4.50 1.25-4.50 2.25-4.25 2.25-4.25 2.25-4.50 2.25-5.50 0.50-3.00 1.25-5.45 0.50-3.00 1.25-5.60 0.50-3.00 1.25-7.25 0.50-3.00 1.25-9.00 1.25-5.75 1.25-6.95 1.25-7.50 1.25-9.00 2.25-5.75 2.25-7.00 2.25-9.09 2.25-9.00 0.50-3.00 1.25-8.00 0.50-3.00 1.25-8.00 1.25-8.00 0.5-5.00 1.25-8.00 0.5-5.00 1.25-8.45 1.25-8.45 1.25-8.45 1.25-8.00 2.25-9.80 2.25-9.80 2.25-9.80 2.25-9.80 0.50-5.00 1.25-8.00 0.50-5.00 1.50-7.50 0.50-5.00 1.50-7.50 0.50-3.00 1.50-6.00 1.60-8.45 1.60-7.00 1.60-7.01 1.50-6.50 2.50-9.80 2.50-9.80 2.50-9.81 2.50-9.00 4.85 4.60 4.29 5.92 6.17 5.25 5.05
2.50- r 2.14 2.12 2.25 2.28 2.38 1.92 1.89 2.00 1.92 1.92 1.98 1.88 2.12 2.56 2.69 3.35 3.33 3.17 3.19 2.77 3.28 3.08 1.75 2.52 3.50-4.55 3.50-5.45 3.50-5.50 2.50-5.85 1.80-4.40 2.29-4.80 3.55-4.55 3.55-4.55 3.55-4.55 3.50-4.55 3.50-4.55 3.50-4.55 3.50-4.55 3.50-5.45 3.50-5.50 3.50-5.50 3.50-5.50 3.50-5.50 4.00-7.20 4.00-6.90 3.00-6.85 2.50-5.85 2.00-3.40 2.00-2.90 2.00-2.84 1.80-4.40 1.80-4.16 1.75-4.50 1.75-4.50 2.29-4.80 8.25-16.00 12.00-25.00 8.25-14.75 8.25-16.00 12.00-25.00 8.25-14.75 9.00-18.50 14.50-25.00 7.00-10.75 5.93-18.50 4.50-21.50 5.50-12.00 9.50-23.00 5.50-26.50 8.99-13.00 8.95-23.00 5.50-21.50 8.90-11.99 8.00-16.00 12.00-25.00 5.90-14.75 8.25-16.00 12.00-25.00 8.25-14.75 8.25-16.00 12.00-25.00 8.25-14.75 8.25-16.00 12.00-25.00 8.25-14.75 8.25-16.00 12.00-25.50 8.25-14.75 8.25-16.00 12.00-25.00 8.25-14.75 8.25-16.00 12.00-25.00 8.25-14.75 8.25-16.00 12.00-25.00 8.25-14.75 11.37 11.30 10.31 10.33 10.92 10.99 11.74 11.65 11.96 11.37 11.20 11.65 10.86 11.34 11.00-18.50 14.50-25.008.75 (r )-14.75 11.00-18.50 14.50-25.00 8.45-14.75 11.00-18.50 14.50-25.00 8.45-14.75 9.00-18.50 14.50-25.00 7.00-10.75 11.63 10.49 10.49 r 10.31 8.95-18.50 10.00-21.50 7.00-10.75 7.50-18.50 4.50-21.50 6.90-8.95 6.99-18.50 4.50-21.50 4.50-10.75(r) 5.93-18.50 4.50-21.50 5.50-10.75 8.50-19.50 5.50-21.50 5.50-12.00 9.50-19.50
 5.50-21.50 8.99-13.00 9.50-19.50 5.50-26.50 8.99-13.00 9.50-23.00 5.50-26.50 8.99-13.00 8.90-13.00 5.5-26.5 8.90-13.00 8.95-23.00 5.50-26.50 8.90-13.00 8.95-23.00 5.50-26.50 8.90-13.00 8.95-23.00 5.50-21.50 8.90-11.99 10.09 10.07 10.04 10.33 10.49 10.69 11.14 10.92 10.97 10.83 10.83 10.99 2.25-4.77 8.95-23.00 9.99-26.50 8.95- Q1 0.5-3.00 1.50-8.00 1.50-8.00 2.50-8.00 Source: Local Commercial banks returns: 1/ From (Qtr 3, 2002) Data covers 2 out of 3 banks (2 banks merged).
From Qtr 4 2003 data covers all commercial banks.

From Qtr4, 2007 to date, data covers 4 commercial banks 2/ Interest rates relating to vatu advances ranging from the minimum 4.5-5.5 percent also reflect rates offered to their staff.
r: Revised 50 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 12: DENOMINATIONS OF CURRENCY ON ISSUE End of Period 2005 2006 2007 2008 2009 2010 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 Q4 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 Q4 VT100 VT200 Notes VT500 VT1,000 VT5,000 Total & Coins ( Millions of Vatu ) Coins Total Notes 4,365.4
r r Q1 24.7 109.4 238.3 1,843.5 2,148.3 4,364.2 658.8 5,023.0 r. Revised 51 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 13: NET OFFICIAL RESERVES 1.
Net Official Reserves Foreign Special Exchange of RBV Drawing Rights Position in IMF (2) Reserve (1) (3) (Millions of Vatu) 2.
Net Foreign Assets of Commercial Banks Foreign Liabilities (8) Foreign Assets (7) Net Position (7-8) (9) Total Holdings (1+2+3) (4) Foreign Liabilities (5) Net Position (4-5) (6) End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 2008 Q1 Q2 Q3 Q4 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 Q4 2011 Q1 9,149.6
7,141.5
8,540.9 12,226.1 6,988.6 7,572.7 7,072.0 7,141.5 7,241.0 8,488.9 9,090.7 9,372.9 8,522.0 8,683.8 8,113.0 8,174.0 8,174.7 7,874.8 8,298.8 8,631.9 8,675.5 6,591.4 7,366.9 8,540.9 10,438.2 11,071.4 12,210.7 12,226.1 r QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 14: RESERVE BANK NOTES ISSUED IN THE PRIMARY MARKET Date of Issue Period of Original Maturity Date of Maturity Amount Issued (Million VT) Float Received Accepted Weighted Average Yield of Accepted Tenders Range of Yields Received Maturities (MVT) Notes Outstanding (Million Vatu) 1/ 12-Jan-11 19-Jan-11 26-Jan-11 2-Feb-11 9-Feb-11 16-Feb-11 2-Mar-11 9-Mar-11 16-Mar-11 23-Mar-11 30-Mar-11 7 14 28 63 91 Total 7 14 28 63 91 Total 7 14 28 63 91 Total 7 14 28 63 91 Total 7 14 28 63 91 Total 7 14 28 63 91 Total 7 14 28 63 91 Total 7 14 28 63 91 Total 7 14 28 63 91 Total 7 14 28 63 91 Total 7 14 28 63 91 Total 19-Jan-11 26-Jan-11 9-Feb-11 16-Mar-11 13-Apr-11 26-Jan-11 2-Feb-11 16-Feb-11 23-Mar-11 20-Apr-11 2-Feb-11 9-Feb-11 23-Feb-11 30-Mar-11 27-Apr-11 9-Feb-11 16-Feb-11 2-Mar-11 6-Apr-11 4-May-11 16-Feb-11 23-Feb-11 9-Mar-11 13-Apr-11 11-May-11 23-Feb-11 2-Mar-11 16-Mar-11 20-Apr-11 18-May-11 9-Mar-11 16-Mar-11 30-Mar-11 4-May-11 1-Jun-11
 16-Mar-11 23-Mar-11 6-Apr-11 11-May-11 8-Jun-11 23-Mar-11 30-Mar-11 13-Apr-11 18-May-11 15-Jun-11 30-Mar-11 6-Apr-11 20-Apr-11 25-May-11 22-Jun-11 6-Apr-11 13-Apr-11 27-Apr-11 1-Jun-11 29-Jun- 100
QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 15: COMMERCIAL BANK’S LIQUIDITY End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 Vault Cash Liquid Assets Deposits with RBV (Excess Reserves) (1) (2) Total (1+2) (3) Statutory Reserve Deposits (SRD) RBV Notes (Millions of Vatu) Total (4) (5) (3+4+5) (6) 2,510.0
1,739.2
r r QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 16: DOMESTIC BANKS CONSOLIDATED CAPITAL – 2/ (Thousands of Vatu) End of Paid-Up Period Capital Audited Retained Earnings (losses) TIER 1 TIER 2 TOTAL Less CAPITAL Other Less Less TOTAL Unaudited Asset General Provisions Term subordinated TOTAL TIER 1 holdings BASE 2/ goodwill etc Unaudited Losses TIER 1 CAPITAL Profits 2/ revaluation reserves for doubtful depts Eligible dept etc.
Gross Eligible TIER 2 CAPITAL & TIER 2 2/ 1/ 1/ 1/ 1/ of other banks capital instruments 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 2008 Q1- 2/ Q2- 2/ Q3- 2/ Q4- 2/ 2009 2010 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 1/ Excluding branches of foreign banks 2/ Revised 3/ Impared assets 4/including branches of foreign banks 47,970 (1,000) 47,970 (2,000) (1,000) (1,000) 55 184,517 188,074 224,172 217,000 329,000 329,054 168,069 175,392 178,633 184,517 176,700 199,386 183,095 188,074 190,325 201,369 214,017 224,172 233,217 241,733 256,511 217,000 309,606 305,078
- - QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 16: DOMESTIC BANKS CONSOLIDATED CAPITAL – 2/ ….
continue (Thousands of Vatu) Total risk ASSETS QUALITY - 4/ End of weighted 1 Asset Quality Total Total risk Restructured Non-accrual 2 Provisioning Period assets 4/ Standard Substan- dard Doubtful (D) Loss (L) lending losses weighted assets 1/ items items (D+L) 3/ Provisions (specific) Provisions (General) Security 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 2008 Q1- 2/ Q2- 2/ Q3- 2/ Q4- 2/ 2009 2010 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 3,332,367
20,532,711
28,234,670
1/
86,675 2,264,392 615,705 243,162 29,424,215 1/ Excluding branches of foreign banks 2/ Revised 3/ Impared assets 4/including branches of foreign banks 56 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 17: INTERNATIONAL BANKS – BALANCE SHEET (A) TOTAL ASSETS (Thousands of Vatu) 3 LOANS & ADVANCES End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 1 CASH ITEMS 2 MARKET SECURITIES (up to 1 yr.
Original Maturity) Cash Balances Gold and & CDs issued by banks Silver Bullion Cash items in process of collection TOTAL Zone A: Bank securities Zone A: Other public sector TOTAL Other securities Public Sector Banks TOTAL Other loans & advances - - - - - 454 462 517 518 11 12 12 12 12 - - - - - - 16,884
QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 17: INTERNATIONAL BANKS – BALANCE SHEET (A) ….
continue TOTAL ASSETS 4 INVESTMENTS (Over 1 yr Original Maturity for dept instrument) TOTAL Institutions Securities Zone A: Affiliated Other Public Sector & Bank Securities Other Equities Equipement & other fixed assets(net of accumulated depreciation) (Thousands of Vatu) 5 OTHER ASSETS Accured interest receivable TOTAL Other assets 6 TOTAL ASSETS - - 2,807 2,727 5,697 2,417 2,452 2,426 - 2,527 2,650 2,762 - 2,813 - - - - 731,900
230,087 688,403 661,645 672,560 652,137 731,900 656,835 659,566 700,022 691,629 687,530 684,714 686,439 699,304 743,606 629,117 603,941 87,130 85,789 106,431 73 475 110,303 End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 18: INTERNATIONAL BANKS – BALANCE SHEET (B) TOTAL LIABILITIES 1 DEPOSITS 2 TERM DEPT AND OTHER BORROWINGS End of Period Banks Corpora- tions Trusts Individuals Negotiable certificates of
 deposits Other TOTAL Other notes & bonds Unsecured subordinated dept (over 5 yrs original term maturity) TOTAL Other borrowings (including loans, overdrafts, commercial papers) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 15,562
48,685 13,460 10,869 10,786 12,330 15,563 15,562 15,584 16,240 28,992 31,478 28,464 23,893 22,585 19,269 8,507 9,217 8,578 5,242 4,485 1,845 668 710 710 1102 0 60,448 39,515 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 18: INTERNATIONAL BANKS – BALANCE SHEET (B) ….
continue TOTAL LIABILITIES End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 3 ACCRUED LIABILITIES Accrued interest payable Dividend payable Other accured expenses TOTAL 4 OTHER LIABILI- TIES 5 LOSS RESERVES TOTAL General loan loss reserves Other loss reserves 6 TOTAL LIABILI- TIES 7 SHAREHOLDERS EQUITY Issued & fully paid up common Additional Unappro- Current year's priated paid up net retained capital in income/ earnings stock (at par excess of par or or norminal (loss) nominal value) value Perpertual on-comulative issued & fully paid up preference share 8 TOTAL 9 TOTAL LIABILITIES & SHARE- HOLDERS EQUITY 68 56 35 885 587 12 114 21 68 25 35 39 56 6 75 35 35 4 10 0 641r 546,730
752
-616 1,375 567 423 976 207 468 166 -741 -616 724 943 1,015 1,400 230 515 718 567 298 356 - QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 19: DOMESTIC BANKING INDUSTRY FOREIGN EXCHANGE TURNOVER AGAINST VATU CURRENCY FOREIGN EXCHANGE TURNOVER AGAINST VATU CURRENCY (VT '000') End of Period OUTRIGHT SPOT Resident Dealers Overseas Banks Resident Customers Non-resident Customers 2005 Q1 Q2 Q3 Q4 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1,041,807
Internal Transac- tions 42,234 25,000 38,486 17,225 58,979 550,359 14,585 257,439 205,971 0 Total
 Resident Dealers Overseas Banks OUTRIGHT FORWARD Resident Non-resident Customers Customers Internal Transactions Total Resident Dealers Overseas Banks Resident Customers Non-resident Customers Internal Transactions Total SWAPS - - - - - - - - - - - - - - - - - 2011 Q1 161224 388761 3685887 0 244 4,236,116 FOREIGN EXCHANGE TURNOVER AGAINST USD CURRENCY (VT '000') End of Period OUTRIGHT SPOT Resident Dealers Overseas Banks Resident Customers Non-resident Customers Internal Transac- tions Total Resident Dealers Overseas Banks OUTRIGHT FORWARD Resident Non-resident Customers Customers Internal Transactions Total Resident Dealers Overseas Banks Resident Customers Non-resident Customers Internal Transactions Total SWAPS 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 Q4 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 Q4 2011 Q1 12677 368 1150 13010 2541 1665 2765 80,000 7,325 3935 1,395 2,122 401,491 2,687 725 1,197 1,197 2776 470810 435004 532560
528763
- - - - - - - - - - - - - - - - - - - - - - Total FX turnover against Vatu 1,071,172 1,272,790 1,464,181 1,670,559 1,679,372 2,637,723 1,727,862 1,617,375 1,933,623 2,289,776 4,499,804 3,212,893 3,515,884 5,878,769 7,842,548 4,447,259 6,503,084 4,966,049 6,122,775 5,779,092 4,794,491 5,189,562 5,417,310 5,930,815 4,236,116 Total FX turnover against USD 591,962 544,063 767,834 594,794 712,784 1,471,168 713,922 1,424,417 528,763 447,352 714,285 999,426 1,765,701 724,194 1,093,952 1,300,789 1,240,171 501,314 786,603 908,186 602,386 334,025 525,591 533,939 TOTAL FX TURNOVER AGAINST VATU & USD 1,663,134 1,816,853 2,232,015 2,265,353 2,392,156 4,108,891 2,441,784 3,041,792 2,462,386 2,737,128 5,214,089 4,212,319 5,281,585 6,602,963 8,936,500 5,748,048 7,743,255 5,467,363 6,909,378 6,687,278 5,396,877 5,523,587 5,942,901 6,464,754 565,339 4,801,455 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 20: DOMESTIC BANKING INDUSTRY CORE SET OF FINANCIAL SOUNDNESS INDICATORS (%) DEPOSIT - TAKING INSTRUMENTS 1 CAPITAL ADEQUACY Regulatory Tier 1 Capital to risk - Weighted assets 1/ Regulatory Capital to risk - Weighted assets 1/ 2 ASSET QUALITY Nonperform- Nonperform- loans net of provisions to capital loans to total gross
 loans 3 EARNINGS & PROFITABILITY Return on Return on assets (ROA) equity (ROE) r/ r/ 2010-Q4 2010-Q4 r/ Interest margin to gross income End of Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 2008 Q1 - r/ Q2 Q3 Q4 2009 2010 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 32.3
32.5 29.5 30.6 28.5 25.6 25.6 29 28.4 31.1 32.3 28.4 28.4 26.9 28.6 37.9 35.3 35.9 35.0 35.9 35.9 35.3 32.5 32.9 33.5 29.9 29.5 17.0 1/ - Excluding branches of foreign banks 2/including foreign branches r - revised Noninterest expenses to gross income LIQUIDITY Liquid assets to total assets 5.6r QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 21: DOMESTIC BANKING INDUSTRY – PROFIT (VATU ‘000’) PROFIT End of Period Interest income 1 INCOME Non-interest income Total Operating Income Interest Expense 2 EXPENSES 3 PROFIT & LOSS STATEMENT
 Total Operating expenses Net Interest Income Operating Profit before tax, write-offs & provisions Operating Expenses (Excluding bad depts & provision charges Provisions General Reserves Extraordinary Items Bad Depts Written-off Bad-depts recovered Net Operating Profit 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 951,810 1,044,965 1,130,417 1,320,485 1,259,480 1,301,294 769,060 824,346 877,408 951,810 917,459
 1,118,806 1,072,416 1,044,965 1,039,365 1,171,178 1,089,604 1,130,417 1,162,696 1,234,970 1,289,150 1,320,485 1,114,132 1,183,370 1,281,349 1,259,480 1,230,864 1,267,887 1,315,578 1,301,294 1,277,219 r/ - revised 1,203,593
7,142
530,161 555,339 580,509 636,522 766,861 7,142 22,635 25,029 34,820 (7,871) 7,173 26,181 18,821 (25,552) 7,142 30,522 17,884 20,762 22,635 23,992 45,027 30,723 25,029 22,636 28,257 31,403 34,820 (691) 3,134 2,521 (7,871) 15,934 61,934 23,863 7,173 632,968 1,910,187 474,018 898,075 1,372,093 803,201 538,094 209 32,990 12,773 16,563 32,990 1,851 1,851 1,234 12,773 4,296 1,100 20,237 16,563 750 63 (1,336) (7,488) (9,082) (110,071) 97,148 119,909 3,241 (303) (2,108) (1,336) (9,762) (2,539) (12,588) (7,488) (6,654) (19,865) 1,734 (9,082) (41) (12,722) 409,762 (110,071) 7,310 (160,157) (84,987) 97,148 74,858 (32,921) 58,183 119,909 81,106 586,995 550,754 690,185 71,700 428,111 623,216 461,252 514,451 590,706 586,995 568,732 731,853 625,281 550,754 562,357 609,313 434,741 690,185 - 456,130 515,572 74,246 717,040 431,193 780,195 883,489 428,111 460,251 550,396 534,239 623,216 456,029 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 22: VANUATU GOVERNMENT FISCAL OPERATIONS (Millions of Vatu) TOTAL REVENUE AND GRANTS EXPENDITURE AND NET LENDING Items 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 Domestic Revenue Tax Revenue Non Tax Revenue Grants from Abroad 268.8
TOTAL 9113.3 10014.7 12032.7 16623.8 16824.5 16997.1 2206.5 2261.8 1678.9 2966.0 2491.9 2314.1 2500.9 2707.9 2770.6 2900.8 3079.2 3282.1 3180.9 4652.5 4575.1 4215.2 3611.6 4519.9 4309.5 4383.5 4448.0
 4841.7 4106.8 3600.7 3131.3 221.9 1010.3 4363.5 Source: Department of Finance Recurrent Expenditure Lending minus Repayments Non-recurrent transfer to Gov.
bodies Development Expenditure TOTAL DEFICIT / SURPLUS 1170.1 205.6 69.7 1318.4 36.1 -1835.4 484.2 522.6 -367.6 530.9 671.2 138.6 -94.8 -509.5 381.2 -223.4 123.6 -211.7 12.1 289.2 793.8 223.3 903.6 588.4 -24.8 -1431.1 370.5 -317.2 -358.7 -1529.9 495.9 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 23: GOVERNMENT REVENUE CLASSIFIED BY MAJOR SOURCES TOTAL REVENUE AND GRANTS Items Total Recurrent Revenue Taxes on Use of Goods Business Licenses Value Added Tax Turnover Tax Tax Revenue Other Total Tax on International Trade Import duties Total Export duties Total Property Tax Property income Dividents (Millions of Vatu) Non Tax Revenue Admin.
fees & Charges Other Other Property income Total Sale of Fixed Capital Asset Grants from abroad 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Source : Department of Finance 5,845.6
- 5.7 6.7 0.9 8.0 1.4 - - - - 3.2 0.6 0.4 1.5 7.2 (0.5) 0.0 0.0 0.7 0.0 0.1 0.0 0.1
0.6 0.4 1.5 7.2 (0.5) # # # # # # - 36.6 233.8 (36.7) 10.2 - 410.5 20.0 - 55.0 - - - 140.8 143.0 153.4 133.4 140.1 145.6 2.4 1.5 131.8 5.1 2.4 4.4 132.8 3.4 1.0 2.6 145.7 4.1 1.2 1.6 135.0 (4.5) 2.2 1.1 133.8 3.0 (0.5) 150.1
(0.1) 0.6 10.4 2.4 0.4 0.3 1.4 4.1 4.1 (1.0) QUARTERLY ECONOMIC
1,770.3 952.2 489.6 1,010.3 65 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 24: GOVERNMENT EXPENDITURE CLASSIFIED BY MAJOR CATERGORY TOTAL EXPENDITURE Items Services Total Goods and o/w Wages& Salaries Recurrent Expenditure Interest payments Domestic External Total Subsidies and transfers o/w Provinces & Municipalities Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 1722.4 1739.2 2046.6 2435.1 1820.7 2175.4 2595.7 3217.4 2389.4 3124.2 2955.6 3493.9 3168.8 4363.3 3781.3 3992.0 2707.9 3931.5 4334.3 5814.6 3982.6 4622.1 4465.5 5130.6 3867.6 Source : Department of Finance -31.1 7.9 56.6 20.9 42.8 26.0 43.0 41.9 28.2 24.6 349.4 337.9 401.5 348.1 317.2 313.9 121.8 48.3 76.9 102.4 113.8 46.2
Total (Millions of Vatu) Acquisition of fixed capital
 assets Lending minus repayments Total Recurrent Expenditures Non-recurrent transfers to Gov.bodies Total Development Expenditure QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 25: VANUATU GOVERNMENT OUTSTANDING BONDS (Thousands of Vatu) BOND HOLDERS Period Ended Reserve Bank of Vanuatu Commercial (1).
Banks Public Corporation Others Total Outstanding 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 Q4 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 Q4 Q1 1,143,690 788,310 1,348,940 3,750 3,284,690 67 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 26: EXCHANGE RATES Period (Yr/Mth) 2006 2007 2008 2009 2010 2007 2008 2009 2010 2011 EXCHANGE RATES: VATU PER UNIT OF FOREIGN CURRENCIES End of Period Rates Averages Australian
 Dollar US Dollar 110.24 102.43 101.49 105.59 98.02 108.08 106.58 105.11 103.05 103.91 101.77 101.03 103.77 99.76 97.53 98.650 99.86 97.41 94.43 95.48 95.54 95.68 94.48 95.70
ECU / Euro Australian Dollar NZ Dollar US Dollar 110.49 103.15 101.35 105.90 97.30 107.24 107.27 106.94 103.21 103.52 102.35 105.48 103.11 102.34 98.81 98.21 99.28 97.65 94.67 95.72 95.30 94.90 95.07 94.43 99.16
QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 27: BALANCE OF PAYMENTS SUMMARY (Millions of Vatu) Period 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 2009 2010 2011 Goods Credit Goods Debit Services Credit Current Account Income Credit Services Debit Income
 Debit Current trans.
cr.
Current trans dr. Current Account 4166 3040 4230 5887 4947 847 1118 1034 1167 364 695 1096 885 607 876 1677 1070 2014 1015 1260 1598 698 1344 1459 1446 -15583 -17996 -24558 -25184 -23531 16116 18959 23593 26093 26718 -7881 -7704 -10939 -11463 -12285 -3077 -3549 -3780 -5177 -3586 -4338 -4821 -5251 -5126 -6087 -6512 -6833 -5881 -6188 -5402 -7713 -5058 -5267 -6723 -6483 3894 3467 4199 4556 3997 4314 4777 5871 4561 4965 6773 7294 5319 5916 7964 6894 5837 6364 7360 7157 -1917 -1944 -2058 -1962 -1619 -1859 -2102 -2124 -2320 -2900 -2806 -2913 -2741 -2836 -2604 -3282 -2798 -2891 -3256 -3340 1396 -5375 4507 -2777 3516 3697 3747 2765 3243 764 817 947 988 851 872 760 1214 837 969 911 1030 590 638 676 861 915 785 744 799 862 -5760 -6532 -4228 -5246 -5347 -1668 -1728 -1496 -868 -2336 -1530 -1151 -1515 -1001 -1120 -1163 -944 -968 -1583 -1450 -1245 -1284 -1252 -1758 -1053 -1223 3355 2944 4309 3393 2819 990 970 750 645 668 883 780 613 517 1264 1116 1412 829 1182 605 777 691 776 844 508 357 -556 -274 -234 -215 -321 -176 -180 -109 -91 -42 -37 -34 -161 -40 -99 -43 -52 -42 -37 -94 -42 -49 -43 -157 -72 -2627 -3866 -4080 -3970 -3757 -343 -1029 -513 -742 -1703 -1000 -695 -468 -1965 -2132 -47 64 -880 -1893 955 -2152 -1048 -184 -1487 -1038 -83 -2336 ** - Number of months cr - Credit dr - Debit 69 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 27: BALANCE OF PAYMENTS SUMMARY ….
continue (Millions of Vatu) Period Capital Account Capital account dr. Capital account cr.

Capital Account Capital & Financial Account Financial Account Direct Invest.

abroad Direct Invest.

in Vanuatu Portfolio invest.

assets Portfolio invest.

Other invest.

Other invest.
liabilities assets liabilities Reserve assets Financial Account -109 -121 55 -130 -112 -29 -29 -21 -30 -30 -30 -30 -31 -31 -31 -32 -32 -32 -32 -33 -33 -35 -25 -27 -25 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 2009 2010 2011 ** - Number of months cr - Credit dr - Debit -28 157 776 -87 -72 11 -2 -7 -30 20 5 5 127 263 116 37 360 -1 31 -135 18 -66 47 - -60 0 0 0 0 -61 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -3086 5312 -5013 13956 7629 -397 -4912 1862 361 802 4682 1076 -1248 -438 -1498 -1335 -1742 3733 3697 -890 7416 1935 946 3211 1537 2090 2079 -9023 4119 -15631 -8565 391 3340 -1174 -478 -1383 -4599 -2859 -182 982 1405 714 1018 -5517 -4041 1697 -7770 -2885 -1554 -2346 -1780 -867 -3598 -833 -958 -2114 -627 -398 -1421 -790 -989 149 -209 -151 -622 56 -121 -276 -617 628 -886 -2580 724 -429 -567 166 203 -187 3089 1323 2317 -621 2065 1240 354 1120 551 985 1164 -196 -388 1919 1174 -285 702 -456 -326 -889 1310 -569 -87 1607 1338 1879 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 27: BALANCE OF PAYMENTS SUMMARY ….
end (Millions of Vatu) Net errors & omissions Gross Official Reserves Net Reserves (Vatu) Net Reserves (USD) Exchange rate (VT/USD) Memorandum Items Projected** Monthly Import Cover Period 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 2009 2010 2011 ** - Number of months cr - Credit dr - Debit -786 1506 2179 2386 -575 -837 410 -795 436 625 -457 59 1279 1187 1282 536 -826 790 2576 -857 -123 829 -642 -298 -464 - QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 28: INTERNATIONAL INVESTMENT POSITION (Millions of Vatu) Period Direct Investment Portfolio Investment Assets Other Investment International Investment Position Liabilities Reserves Assets Direct Investment Portfolio Investment Other Investment Liabilities Net Position -5890 -4906 -12185 -12115 -14209 -6302 -5675 -7066 -5890 -5455 -6460 -6670 -4906 -15013 -15797 -12987 -11960 -11383 -11767 -11346 -12115 -11538 -11288
 -12981 - -16088 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 2009 2010 2011 1573 1636 1855 1984 2098 1513 1534 1555 1573 1590 1612 1624 1636
 1763 1793 1824 1855 1886 1918 1951 1984 2019 2044 2071 2098 2125 ** - Number of months cr - Credit dr - Debit QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 29: EXPORTS Principal Exports Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 Copra Cocoa Beef Timber Kava Value Tonnes Value Tonnes Value Tonnes Value Tonnes Value Tonnes Value Coconut Oil Tonnes Other Domestic Products Other Re-exports Total 5593
217
Source: National Statistics Office Note: Figures revised for quarter 4 2009.
Other quarterly figures will be revised in the 2010 quarter 2 publication 73 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 30: IMPORTS (Millions of Vatu) Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 Food and live animals Bev.

And tobacco Crude mtrls Mineral fuels , excl.fuels Imports for home consumption Animal, veg.

, and oil fats Chemicals Basic manufact.

Mach.

and transpt.equip.
Goods not specified Total Misc.
Imports for Re-exports Total Imports(c.i.f) Source: National Statistics Office Note: Figures revised for quarter 4 2009.
Other quarterly figures will be revised in the 2010 quarter 2 publication 74 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 31: EXPORTS BY COUNTRY OF CONSIGNMENT (Millions of Vatu) Period EEC Japan Australia Countries New Caledonia South Korea New Bangladesh Zealand Other MSG Others Total 2005 2006 2007 2008 2009 2010 1013 416 515 879 725 215 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Source: National Statistics Office QUARTERLY ECONOMIC REVIEW MARCH
1402 1448 1396 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 32: IMPORTS BY COUNTRY OF CONSIGNMENT (Million Vatu) Period Australia New Zealand Japan France Fiji EU New Caledonia Hong Kong Singapore Others Total 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 734
3446 4076 3969 3725 534 545 570 599 672 565 734 775 748 1138 974 1312 969 796 1368 943 612 938 983 1436 936 885 952 952 804 Source: National Statistics Office QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 33: COMPANY REGISTERATION IN VANUATU Part A: Number of Companies on the Registry at end of each Year/Quarter Part B: Company Registration during individual Year/Quarter Type of company Of Which Hold Licenses as: 1.
Number of Fresh Registrations Local Exempt Overseas International Companies Total Exempt Banks Trust Exempt Insurance Financial Companies Companies Institutions Local Companies Overseas Companies Exempt Companies of which: Banks International Companies 2.

Number of Struck off Total 3.

Exempt com.
converted to International companies End of Period 2005 2006 2007 2008 2009 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 1885* 1,489 1,668 NA 116 82 105 95 86 130 123 122 116 112 109 105 82 104 102 105 106 105 104 97 95 94 94 89 86 65 84* 53 72 NA 27 26 37 38 38 26 26 27 27 27 27 28 26 33 33 35 35 37 38 40 38 38 38 38 38 32 37* 29 35 NA 4,625 4,972 2,715 2,124 2,238 4,527 4,561 4,666 4,625 4,672 4,604 4,681 4,972 5,103 4,682 3,603 2,668 2,715 2,784 2,801 2,124 2,147 2,210 2,226 2,238 2,155 2207* 1,634 1,713 6,139 6,467 4,588 4,077 4,294 6,085 6,064 6,179 6,139 6,223 6,191 6,285 6,467 6,771 6,407 5,365 4,470 4,588 4,718 4,721 4,077 4,145 4,218 4,257 4,294 4,081 4212* 3,205 3,488 NA NA 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 20 7 7 7 10* 7 7 NA 1 1 1 1 1 2 2 2 1 1 2 1 1 1 2 1 2 1 2 2 1 1 1 1 1 2 1* 2 2 NA * data not available - four quarters moving average figure used 177 63 72 46 52 46 32 41 58 49 74 36 63 36 60 63 63 72 61 29 46 33 24 57 52 31 41* 41 39 NA 2 2 3 0 0 1 0 1 0 0 0 1 2 2 0 3 0 3 0 2 0 0 0 0 0 0 0* 0 0 NA 3 0 1 0 0 1 2 0 0 1 2 1 0 1 1 2 0 1 1 0 0 0 0 0 0 0 0* 1 0 NA 354 448 75 56 32 96 83 99 76 48 65 92 448 108 110 78 80 75 62 77 56 43 32 40 32 32 34* 45 29 NA 536 513 151 102 84 144 117 141 134 98 141 130 513 147 171 146 143 151 124 108 102 76 56 97 84 63 75* 87 68 NA 254 98 52 700
 23 14 94 27 119 8 135 21 98 22 495 1,120 1,033 52 7 54 700 35 26 67 25 23 35* 131 844 NA 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 NA 10 11 18 15 15 10 11 11 10 11 11 11 11 15 15 15 15 18 12 15 15 15 18 15 15 15 16* 15 15 NA 39 27 27 26 28 47 39 39 39 37 40 39 27 31 32 70 34 27 11 11 26 37 67 28 28 28 38* 28 28 NA 77 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 34: SHIPPING REGISTERATION Fresh Ship Registration during the Ships Deregistered Number of Ships on the registry during the year/ at
 end of the quarter Total of all Shipping Fees Collected by MPIF Trust Funds Collected by Period Year/Quarter period VMSL (Vatu in Millions) VMSL (Vatu in Millions) 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 2007 2008 2009 2010 2011 Q1 72 103 103 96 69 24 21 8 19 27 24 32 20 24 16 45 18 14 17 31 34 26 43 34* 23* NA 85 80 95 74 51 30 25 8 22 26 23 15 16 19 17 45 14 7 17 22 28 22 29 25* 20* NA 583 606 614 636 610 590 586 586 583 584 585 602 606 611 610 610 614 621 621 630 636 640 657 641* 610* NA * data not available - moving average four corresponding quartersback NA - Not Available 78 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 35: FINANCE CENTRE INSTITUTIONS: LOCAL EXPENDITURE, VALUE-ADDED, EMPLOYMENT AND TOTAL ASSETS (Thousands of Vatu) INSTITUTIONS (1) GRAND TOTAL 2005 2006 2007 2008 2009 2010 Banks 2010 Q1 Q2 Q3 Q4 2011 Q1 Total Local Expenditure (8+12+13) (2) Total Wages & Salaries (3) Rent RECURRENT EXPENDITURE Interest Total (3+4+5) (4) (5) (6) Other Recurrent Expenditure (7) TOTAL (6+7) (8) TAXES AND LEVIES Import Duties Central Government Fees (9) Local Government Revenue (11) CAPITAL EXPENDITURE (13) TOTAL (9+10+11)
 (12) VALUE OF TOTAL ASSETS IN VANUATU (14) TOTAL LOCAL EMPLOYMENT (No.)
Ni-Van.

Expat.
(15) (16) -32,974 64,596 65,504 65,895 20,691 368,514 407,545 671,213 405,034 1,433,023 1,186,512 86,386 54,192 57,034 189,601 47,487,022 47,487,022 54,734,109 60,781,037 69,180,948 63,061,484 54,710,985 40,251,567 51,178,725 51,190,870 NA NA NA NA NA NA NA NA NA NA NA NA NA (10) 5,033 5,057 18,130 14,161 42,181 9,373 1,531 3,208 3,294 1,340 Trust & Insurance Companies 2010 Q1 383,711 Q2 426,192 Q3 460,930 Q4 490,853 52,819 68,091 73,585 67,523 6,260 7,756 10,575 12,513 2011 Q1 NA NA NA Accounting Firms 2010 Q1 Q2 Q3 Q4 131,647 131,807 202,275 201,412 96,744 96,863 101,529 101,544 6,356 6,356 7,305 7,305 114 114 114 114 NA 3,504 3,504 6,422 6,422 59,193 75,961 84,274 80,150 122,665 150,763 174,467 203,824 181,858
 226,724 258,741 283,974 13,816 11,139 11,891 11,619 0 0 0 0 NA NA NA NA NA 106,604 106,723 115,256 115,271 17,636 17,677 79,630 78,844 124,240 124,400 194,886 194,115 3,690 3,690 3,365 3,305 0 0 0 0 411 98 285 345 NA 0 0 0 0 3,690 3,690 3,365 3,305 2011 Q1 NA NA NA NA NA NA NA NA NA NA NA Legal Firms/ offshore instns 2010 Q1 49,056 Q2 48,076 Q3 49,714 Q4 50,206 27,601 27,275 28,086 28,350 1,185 1,185 1,185 1,185 2011 Q1 NA NA NA 929 580 541 493 NA 29,715 29,040 29,812 30,028 10,959 9,716 10,887 11,355 40,674
 38,756 40,699 41,383 1,259 1,009 1,442 1,800 0 0 0 0 1,253 2,583 1,833 1,295 2,512 3,592 3,275 3,095 NA NA NA NA NA NA NA Sources: Banks, Trust Companies, Accounting Firms, Legal Firms and Offshore Institutions NB: Banks section of this table includes the National Bank of Vanuatu, BRED Bank Vanuatu, ANZ bank Vanuatu, West Pac Bank Vanuatuand other banks :Trust and Insurance company section of this table includes the Vanuatu National Provident Fund and other incurance firms 79 14,227 11,237 12,176 11,964 187,626 188,231 190,013 194,915 11,477,148 10,971,861 10,950,021 10,958,958 NA NA NA 452,717 452,436 674,659 655,744 NA 267,019 267,342 265,652 255,912 3,717 3,717 4,024 3,992 NA 5,870 5,728 5,740 5,728 NA NA NA TOTAL (15+16) (17) 613 523 669 755 763 792 468 498 502 512 NA 127 127 128 129 NA 114 114 113 113 NA 39 39 38 38 NA 73 47 73 82 82 85 28 31 31 30 NA 16 17 17 18 NA 30 30 30 30 NA 7 7 7 7 540 476 596 673 681 707 440 467 471 482 NA 111 110 111 111 NA 84 84 83 83 NA 32 32 31 31 NA QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 36: VISITOR ARRIVALS Non Resident Visitors by mode of travel Air arrivals by purpose of Visit Period Air Cruiseship Total Stop-over Holiday Visiting friends Other Business / Meetings Purposes Not Stated 2005 2006 2007 2008 2009 2010 62082 68179 81345 90521 100634 97180 63554 85922 85737 106138 124818 140468 2005 2006 2007 2008 2009 2010 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 12648 13309 18507 17618
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Source: National Statistics Office 47865
QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 37: VISITOR ARRIVALS COUNTRY OF ORIGIN / HOTEL OCCUPANCY RATES Air arrivals by Country of origin Facilities at end of period: Period Australia New New Zealand Caledonia Other Pacific Europe North America Japan Other Countries Not Stated Total Hotels Number Room nights offered Occup.
rate Beds nights offered Occup.
rate Number 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Source: National Statistics Office 1
562 477 540 470 442 723 580 593 692 723 555 481 81 29 29 na na na 27 23 29 29 29 29 29 29 na na na na na na na na na na na na na na na na na 902 924 na na na 883 901 882 886 951 921 901 924 na na na na na na na na na na na na na na na na na 86024 83083 na na na 80718 85704 80934 80514 83564 87699 82212 78858 na na na na na na na na na na na na na na na na na 1 0 na na na 0 0 1 1 1 0 1 1 na na na na na na na na na na na na na na na na na 2317 2455 na na na 2119 2444 2352 2382 2458 2452 2445 2466
 na na na na na na na na na na na na na na na na na 211967 220593 na na na 202463 216604 216893 215457 215727 221102 219670 225872 na na na na na na na na na na na na na na na na na 0 0 na na na 0 0 0 0 0 0 0 0 na na na na na na na na na na na na na na na na na QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 38: CONSUMER PRICE INDICES (Growth relative to previous quarter) Period Food Drinks & Tobacco Rent, Clothing etc Water, Electricity Household Transport Recreation, Supplies & Comm.
Educ., Health etc Average 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 2008 2009 2010 0.0 0.7 0.9 2.5 0.9 1.3 -1.8 0.6 0.6 0.7 1.2 1.1 0.4 0.0 1.6 1.5 0.2 0.3 2.6 2.6 5.5 -0.2 2.5 2.6 -0.4 -1.2 3.6 1.2 - Q1 -1.0 -1.0 Source: Vanuatu Statistics Office -0.2 -0.1 0.0 -0.1 0.5 -0.5 0.6 0.0 -0.1 0.1 0.0 -0.1 0.0 -0.1 0.0 0.0 0.0 0.1 0.8 1.4 -1.7 -0.9 0.3 0.2 1.1 0.3 -1.9 0.0 -0.3 0.1 0.0 -0.2 0.2 -0.2 2.1 0.6 0.3 0.8 -1.7 0.2 0.1 0.0 0.0 0.7 0.0 -0.4 0.0 -0.6 0.1 0.9 0.4 1.3 1.1 1.4 -0.9 0.8 1.2 0.2 0.1 0.7 0.1 -0.1 0.1 0.7 0.8 0.5 1.2 0.3 0.3 -0.3 0.3 0.3 0.6 1.7 0.3 0.0 0.4 2.0 0.6 0.1 4.4 0.2 2.5 -1.0 6.1 -1.8 0.4 0.2 1.2 -0.6 0.2 0.3 0.0 0.7 1.2 1.6 -0.9 2.2 0.2 2.7 0.2 0.0 0.0 0.0 4.5 0.0 0.1 0.4 4.4 1.6 0.0 -2.8 -0.2 -40.0 -0.7 0.1 1.2 5.7 1.8 1.8 -0.9 0.0 0.0 1.6 1.4 0.5 1.1 0.6 1.0 0.7 3.3 1.1 0.9 0.4 1.1 0.1 0.0 0.8 3.7 -0.6 0.4 1.1 -0.2 1.5 0.1 1.0 0.3 -0.2 5.0 -1.3 1.7 1.3 0.2 -0.2 -0.2 82 Percent (%) ALL GROUPS 0.4 0.5 1.0 1.4 0.4 0.9 0.5 0.4 0.5 0.4 0.8 0.6 0.2 0.3 2.1 1.3 0.3 0.4 1.6 1.5 2.4 0.2 1.9 1.0 0.4 -1.8 2.4 0.7 0.1 0.2 -0.4 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 39: CONSUMER PRICE INDICES (Growth relative to same quarter of previous year) Period Food Drinks & Tobacco Rent, Household Transport Recreation, Clothing etc Water, Supplies Electricity & Comm.
Educ., Health etc ALL GROUPS Percent (%) End Year 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 0.0 2.7 3.5 10.6 3.9 5.2 -0.1 0.5 - Source: Vanuatu Statistics Office 0.6 -0.2 0.1 -0.2 1.9 -2.1 0.1 0.7 0.5 0.6 0 -0.1 0.0 -0.2 -0.2 -0.2 -0.1 0.1 0.9 2.3 0.6 -0.2 -0.7 -1.8 0.7 1.9 -0.4 -0.6 -2.0 -2.1 -0.2 -0.7 0.7 -1.0 8.3 0.6 2.1 0.6 -1.0 -0.8 -0.7 -1.5 0.3 0.8 0.7 0.3 0.3 -1.0 -1.0 0.4 0.8 2.5 8.3 2.2 1.0 -0.1 0.6 -0.6 -0.3 -0.5 2.1 - -3.6 8.2 0.9 3.1 3.3 2.8 2.8 0.2 4.5 0.1 0.2 0.6 4.9 6.6 6.5 3.0 -1.5 -2.9 -3.6 - -1.2 3.0 1.8 2.8 3.5 5.7 3.5 2.5 1.6 2.0 4.6 3.9 4.3 4.6 0.6 2.7 2.4 2.3 2.9 1.3 1.2 -1.2 0.2 1.7 1.9 3.0 1.0 83 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 40: CONSUMER PRICE INDICES BY REGION (Growth relative to previous quarter) Food Port Vila Luganville Drinks & Tabacco Port Vila Luganville Clothing etc Port Vila Luganville Rent, Water, Electricity Port Vila Luganville Household
 Supplies Luganville Port Vila Transport & Comm.
Port Vila Luganville Recreation, Educ.
and Health etc Port Vila Luganville Percent (%) ALL GROUPS Port Vila Luganville Period Group Region Average 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 0.6 0.7 0.9 2.4 1.0 1.5 0.2 1.1 0.6 0.6 1.4 0.8 0.3 0.1 1.6 1.5 0.2 0.3 2.5 2.7 4.8 -0.3 2.9 2.7 -0.2 -1.3 4.5 1.4 -0.4 0.3 -0.7 0.5 0.8 0.8 3.4 0.8 0.8 3.1 0.3 0.3 -1.6 0.5 2.0 -0.9 1.7 0.1 1.5 1.7 0.1 2.9 2.2 8.5 0.0 0.9 2.4 1.4 -1.4 0.3 0.7 1.4 0.8 -2.0 0.8 0.3 2.1 1.7 0.8 2.4 -0.4 1.3 1.2 1.2 0.6 0.0 0.3 0.1 0.1 6.8 0.8 0.8 2.9 3.1 0.0 0.7 0.6 2.4 0.1 0.1 8.3 0.9 0.2 0.2 -1.3 1.1 -0.1 1.8 0.7 0.1 2.4 3.7 0.9 -0.2 0.0 -0.2 0.0 0.0 0.0 0.0 0.0 7.5 -0.2 1.2 0.0 1.5 0.2 0.0 0.0 0.0 0.2 4.0 1.8 0.1 3.6 0.0 0.0 0.0 0.0 0.0 0.3 -0.7 -0.3 1.0 -0.2 -0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.1 1.8 -0.8 -0.9 0.1 0.2 0.9 0.0 -2.3 0.0 -0.3 0.0 0.0 -0.9 -0.4 -0.6 -0.5 1.3 -0.1 0.7 0.9 0.0 0.0 0 -1.0 0.0 -0.6 0.0 -1.7 0.4 -1.0 3.9 0.0 -5.8 -0.2 1.4 0.0 2.0 1.6 -0.2 -0.1 -0.1 0.0 0.2 Source: Vanuatu Statistics Office Note: CPI figures will be revised for 2010 quarter 2 as according to VNSO revisions -0.1 0.2 0.0 1.1 1.6 0.5 -1.7 1.0 0.2 0.2 0.0 0.0 0.7 0.1 0.0 0.3 0.3 -0.6 0.9 0.3 1.9 1.3 7.3 -1.9 0.8 0.3 1.2 0.0 0.7 0.1 0.3 -0.4 0.1 -1.2 0.6 0.3 0.7 0 -1.9 0.3 0.0 0 0.0 0.4 0.0 0.4 0.0 -3.4 -1.7 0.7 0.9 0.8 0.0 -0.3 -0.6 0.5 1.6 2.1 0.6 0.1 0.0 -1.2 0.7 0.5 0.5 1.3 0.1 -0.1 0.2 1.2 0.7 0.7 0 1.8 0.3 0.0 0.0 -0.1 2.4 -0.2 3.8 0.2 2.3 -1.1 1.4 -0.9 0.4 -0.4 0.0 -0.7 0.2 0.3 -0.5 -0.5
 0.4 1.1 2.5 0.2 0.4 -0.6 0.0 -1.3 0.1 0.4 1.2 0.0 0.0 0.0 0.0 2.7 1.6 7.7 0.0 2.7 -0.4 0.6 -0.4 0.4 0.2 1.5 0.0 0.1 0.0 0.6 0.3 0.0 3.4 -1.0 2.3 0.3 0.1 1.1 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.4 5.5 7.5 -3.2 -0.2 0.1 -0.8 0.0 1.3 6.7 1.2 2.2 -1.1 0.0 0.0 0.1 0.9 0.1 0.7 -0.2 0.2 0.0 2.7 0.2 0.5 0.0 0 0.4 0.0 0.0 0.3 0.4 1.2 0.7 -0.7 0.0 0.1 -0.2 0.4 0.2 0.2 0.0 -0.2 -0.1 0.2 0.2 0.0 0.5 0.5 1.8 1.7 0.6 0.9 -0.2 1.1 0.5 0.5 0.8 0.6 0.2 0.3 0.1 0.3 5.0 1.9 1.4 1.7 3.6 0.2 2.0 2.2 0.2 -2.0 2.7 0.7 0.0 0.1 0.6 0.4
 0.2 1.8 0.6 0.7 2.1 0.8 0.2 -0.8 0.2 0.9 -0.3 0.6 0.0 0.0 0.8 -0.2 2.4 1.0 3.7 0.2 1.0 0.4 1.3 -0.4 0.7 0.6 0.7 0.6 -0.1 -1.2 0.6 0.6 1.1 0.6 -0.5 0.8 -0.5 1.1 0.8 0.8 1.3 0.2 0.0 0.8 0.9 2.2 -0.5 1.8 -0.3 1.7 0.0 1.1 0.0 -0.2 -0.1 -1.5 1.7 1.5 0.2 -0.2 0.0 1.3 0.0 2.5 0.2 0.7 0.4 1.9 3.6 1.2 -1.6 0 0.1 0.0 0.0 0.0 0.0 10.2 -0.2 0.1 0.0 0.1 0.6 2.7 -0.3 0.2 0.0 2.1 0.3 0.1 -0.9 -1.7 84 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 41: CONSUMER PRICE INDICES BY REGION (Growth relative to same quarter of previous year) Food Port Vila Luganville Drinks & Tobacco Port Vila Luganville Clothing etc Port Vila Luganville Rent, Water, Electricity Luganville Port Vila Household Supplies Luganville Port Vila Transport & Comm.
Port Vila Luganville Recreation, Educ.
and Health etc Port Vila Luganville Percent (%) ALL GROUPS Port Vila Luganville Period Group Region End Year 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 0.4 2.6 3.4 9.9 5.7 5.8 4.1 -0.1 - -0.3 2.7 2.7 2.3 1.8 0.9 1.0 1.0 7.2 8.1 8.6 4.5 6.9 6.9 6.8 4.4 3.7 3.8 3.2 11.2 9.6 9.7 9.8 0.3 -0.2 7.2 2.9 0.2 9.8 3.4 4.6 4.4 0.3 1.5 0.6 0.7 -0.2 0.7 -0.2 7.5 7.2 1.0 0.9 2.4 2.9 1.7 1.7 0.2 0.2 4.3 6.1 6.2 9.8 3.5 -0.3 0.2 0.0 0.2 0.2 1.2 -2.6 1.2 0.0 0.2 0.2 -0.3 -0.2 0.0 0.0 0.0 0.0 0.0 0.2 0.3 2.1 1.3 0.2 0.2 -1.3 0.3 1.2 -1.3 -1.5 -2.6 -2.6 0.5 -0.7 -1.4 -2.3 -1.2 5.0 -0.4 -2 2.4 1.6 -0.7 1.5 -0.2 -0.2 -1.4 0.8 -1.4 -0.9 -2.3 2.8 3.2 -2.5 -1.2 -0.1 -0.1 3.2 5.0 3.4 3.3 1.1 -0.4 -1.1 Source: Vanuatu Statistics Office Note: CPI figures will be revised for 2010 quarter 2 as according to VNSO revisions -0.6 0.8 0.0 7.8 6.4 2.0 -0.4 -0.1 -0.6 -0.6 -1.5 0.2 0.7 0.8 0.7 1.0 1.3 0.0 0.6 0.6 2.5 7.8 11.6 9.3 7.5 6.4 0.3 2.2 2.2 2.0 1.5 -0.5 0.4 -4.7 10.6 1.1 2.8 -0.4 -2.2 -1.6 -0.5 -1.3 0.6 0.7 0.4 0.7 0.4 -3.1 -4.7 -1.0 1.1 -0.2 10.6 2.4 1.8 -0.5 1.1 3.5 4.8 4.4 2.8 0 0.8 2.1 2.1 2.0 0.5 -0.2 0.7 0.0 0.8 0.8 0.2 2.5 2.1 2.1 2.1 2.1 2.7 2.1 6.8 4.3 6.3 2.0 2.5 1.3 -0.2 0.5 -0.9 -0.7
 -0.9 -0.2 -0.3 0.9 1.6 4.3 1.1 0.8 1.6 0.2 0.2 -1.5 0.9 0.4 1.7 3.0 1.6 3.0 1.6 3.9 4.3 9.4 9.4 12.4 1.1 1.9 0.6 0.2 0.8 1.7 2.1 1.8 1.6 5.5 2.8 0.1 7.5 -4.0 9.5 1.0 2.6 0.0 2.8 2.8 0.2 0.0 0.0 0.1 0.1 0.4 5.5 7.5 3.6 -1.5 -1.4 -4.0 -0.9 0.6 7.3 9.5 11.9 9.1 2.3 1.0 5.2 0.4 0.7 -0.7 0.9 0.2 3.3 3.1 3.4 5.2 0.3 0.8 0.3 0.4 0.3 0.4 1.2 0.7 -0.8 -0.9 -0.7 -0.7 0.3 0.6 0.7 0.9 0.3 0.0 0.0 0.2 -0.7 -2.2 0.1 1.8 4.3 5.4 2.3 3.5 3.0 -0.1 0.1 0.1 1.9 2.3 1.9 1.8 2.0 3.2 4.1 4.3 3.6 3.9 6.1 5.4 6.0 6.5 4.6 2.3 3.1
-1.8 3.3 0.1 -0.1 2.8 2.8 3.2 2.7 1.9 2.4 2.4 3.3 2.6 4.4 0.9 3.2 3.2 2.8 1.1 0.9 0.8 -1.8 -0.1 1.6 1.9 3.3 0.1 -1.3 0.1 10.0 1.4 2.6 1.5 2.5 6.0 7.3 -1.3 5 0.4 0.2 0.1 0.2 0.1 10.3 10.0 -0.6 -0.3 0.0 1.4 4.0 3.7 3.2 2.6 2.0 2.6 2.5 1.5 0.8 85 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 42: CATTLE SLAUGHTER BY ABATTOIRS PORT VILA ABATTOIR Cattle Slaughter SANTO ABATTOIR Cattle Slaughter TOTAL BEEF PRODUCTION No.
of Heads Weight (Tonnes) Percentage Change Average Weight (Tonnes) No.

of Heads Weight (Tonnes) Percentage Average Change Weight (tonnes) No.
of Heads Weight (tonnes) Avg/Wght Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 2008 2009 2010 2011 Q1 r r r r -2 -2 -5 -1 0 4 -16 35 -14 -3 2 2 -6 2 -1 0 -7 -1 -1 5 -4 4 -5 1 -7 8 10 4 11 -0.2 - Source: National Statistics Office 15 -9 -10 9 -18 -3 -22 14 19 10 -50 -9 153 -16 -42 24 -6 33 -30 -9 77 -9 -52 51 3 18 -9 -2 46 -26 - 285
QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 43: ENERGY CONSUMPTION '000 Kwh / x 1000 Kwh Port-Vila Luganville Malekula Tanna TOTAL Imports Cleared for Home consumption ('000 litres) Petrol Fuel Kerosene Period 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 14075 1752 Source: National Statistics Office (1) Includes White Spirit / Y compris le White Spirit QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 44: POSTAL SERVICES Letters Period Priority Letters Printed Matter Packets Parcels Registered EMS Total Domestic Mail International Mail Outbound
 Inbound Total 64934
65,215
335,477
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Source: National Statistics Office 88 QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 45: MOTOR VEHICLE REGISTRATION – PORT VILA AND LUGANVILLE Period Motorcars Pickups Trucks Buses Motor-cycle TOTAL 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Source: Vanuatu Statistics Office QUARTERLY ECONOMIC REVIEW MARCH 2011 TABLE 46: NUMBER OF PROVIDENT FUND CONTRIBUTING MEMBERS/FULL EMPLOYMENT Period Males 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 % Females Source: Vanuatu Statistics Office 90 % 38 38 38 38 40 40 38 37
Statistics Office 90 % Total 17196