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QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 1 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE OF CONTENTS REFERENCE STATISTICAL ANNEX TECHNICAL NOTES 1 EXECUTIVE SUMMARY 2. INTERNATIONAL ECONOMIC CONDITIONS 3 DOMESTIC DEVELOPMENTS 3.1 REAL SECTOR 3.2 FISCAL OPERATIONS 3.3 FINANCE CENTRE DEVELOPMENT 3.4 MONETARY DEVELOPMENT 3.5 MONEY MARKET DEVELOPMENT 3.6 BANKING SECTOR DEVELOPMENT 3.7 BALANCE OF PAYMENT 3.8 EXCHANGE RATE DEVELOPMENT CHRONOLOGY OF MAJOR EVENTS 2008 BUSINESS EXPECTATION SURVEY ANNEX TABLES PAGE NO 2 4 6 7 8 13 13 17 19 20 25 26 30 34 35-36 37-41 42- 89 1 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 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 Q2 June 2004 Governor’s Speech for Education Economics Workshop 2 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 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 business forum Q4 December 2004 Governor’s speech on overcoming Vanuatu’s economic challenges, 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?
Compilation Q1 March 2006 Factors determining Vanuatu imports – a brief analysis 3 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 STATISTICAL ANNEX TABLE NO.

NO.
I Monetary Conditions (Tables: 1-21) 1 Assets of the Reserve Bank of Vanuatu PAGE 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 March 2008 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 II Domestic Banking Industry Core set of Financial Soundness Indicators Domestic Banking Industry – Profit (Vatu ‘000) Government Finance (Table: 22 - 25) 4 44 45 46 47 48 50 51 52 53 55 56 57 58 59 60 61 63 65 67 68 69 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 22 23 24 25 Vanuatu Government Fiscal Operations Government Revenue Classified By Major Sources Government Expenditure Classified by Major Category Vanuatu Government Bonds Outstanding II External Sector (Table 26-31) 26 27 28 Exchange Rates: Vatu
 per Unit of Foreign Currencies Summary of Balance of Payments International Investment Position 29 Value of Exports 29 30 31 Value of Imports Exports by Country of Consignment Imports by Country of Consignment IV Finance Centre (Table: 32 - 33) 32 33 Company Registration in Vanuatu Shipping Registration V. Real Sector (Tables: 34 - 40) 34 35 36 37 38 39 40 Major Agricultural Production Visitor Arrivals Visitor Arrivals by Country of Origin / Hotel Occupancy Rates Consumer Price Indices by Expenditure Group (Quarter to previous quarter) Consumer Price Indices by Expenditure Group (Quarter to same quarter of previous year) Consumer Price Indices by Expenditure Group (Quarter to previous quarter) Consumer Price Indices by Expenditure Group by region (Quarter to same quarter of previous year) 5 70 71 72 73 74 75 78 79 80 81 82 83 84 85 86 87 88 89 90 91 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TECHNICAL NOTES Statistical data in the Quarterly Economic Review are based on the tables are latest available substantially up-dated and amended from time to time to reflect figures revised by respective sources.
information, and several statistical 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 6 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 and the Industry sector is projected to be the major driver to growth in the year in line with the booming construction projects planned in 2008.
Taking account of these downside risks GDP growth is projected to ease off from 6.8 percent in 2007 to an estimated 6.0 - 6.6 percent in 2008 as estimated by the Ministry of Finance and Economic Management.

Total money supply fell by 0.9 percent in the September quarter to VT57,699.5 million.

Following the decline in money supply commercial banks liquidity continued the quarter.
The persistent tight liquidity in the banking system caused the Bank to refrain from issuing new RBV notes during the third and fourth week of September.

to decline throughout During September the balance of payments recorded a surplus of VT276 million.

The current account deficit was reduced significantly while the surplus in the capital account dropped by around 50 percent.
The trade deficit was reduced by 7 percent, as a VT0.5 billion in the value of imports could not offset the VT8 billion increase in exports.

The third quarter of 2008 ended with a fiscal surplus of VT824.6 million.

The improvement in this quarter was instalment of MCA funds attributed to a accompanied by revenue collection.

in domestic increases large As of the 8th September the rediscount rate was increased to 6.25 percent to counter the strong inflationary pressures.

1.
1.

EXECUTIVE SUMMARY As the global financial crisis deepens world growth, as projected by the International Monetary Fund, is expected to slow to 3.75 percent in 2008.

This is largely driven by the poor performance of the advanced economies like the US and Europe, who are expected to fall into recession next year.

Growth in Emerging Asia is expected to continue albeit at a slower rate.

As a result the growth forecasts for 2009 were cut by 75 basis points to 2.2 percent.
The downturn in the advanced economies has helped to ease the inflationary pressures across the globe, as market prices fall on the expectation that demand will fall next year.

The price of oil has fallen drastically from its high of USD147 to around USD50.

This fall occurred as OPEC fear that demand for oil will fall and consumers will be willing to pay less for the oil as the advanced economies slide into recession.
Several countries have developed monetary stimulus packages accompanied by steep rate cuts from many central banks, in an effort to boost market confidence and keep consumer spending.

In contrast to the advanced nations the domestic economy remained favourable.

All indicators showed improvement during the quarter.

The tourism sector continued to grow due to the increased number of both air and cruise ship visitors in line with the peak season.
Despite easing commodity prices, exports of copra, coconut oil, beef and kava increased significantly in the third quarter.

Domestic inflation continued to remain high in the third quarter with Consumer Price Inflation (CPI) increasing by 2.4 percent and 6.0 percent over the quarter and the year, respectively.

The high prices demonstrate the time lag that Vanuatu experiences as it imports the majority of its goods in bulk and it takes time for the global prices to filter in to our own economy.
CPI is now above the Bank’s comfort zone where inflation is targeted to be between 0-4 percent.

Growth is expected to continue for the rest of year, but there are some downside risks.

The Agriculture sector, in particular prime agricultural exports, may face some shortfalls with the expected drop in commodity prices affecting domestic production.

The economic slow-down in regional tourism-sourced markets could pose some restriction to growth in the tourism industry, and the services sector.
On the positive side, the drop in global food and fuel prices could ease inflationary pressures 7 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Figure 2: US GDP and CPI (Year-ended Percentage Change, Quarterly Data) GDP CPI 6 % 5 4 3 2 1 0 1996 1998 2000 2002 2004 2006 2008 Source: Bureau of Economic Analysis % 6 5 4 3 2 1 0 Asia The data available suggests that the Asian economies are beginning to slow.
This is following the trend of the developed nations like the US and Europe which were the driving forces of the global financial crisis.

In China, real GDP growth slowed to 9 percent from 10.1 in the previous quarter.

While this was partly due to tight macroeconomic conditions in the first half of the year the effect of the temporary suspension of production during the Olympics will also be seen in this quarter’s data.
CPI continued on its downward trend while global inflationary pressures began to ease.

China’s CPI fell to 4.6 percent in September compared to 4.9 percent in August Japan to In Japan economic conditions have continued deteriorate, due to falling domestic demand and a further slow down in exports.

Credit conditions have tightened, albeit to a lesser extent than the other developed countries.
According to the Bank of Japan’s September 2008 Tankan Survey business confidence is down as a result of the global slowdown and moderating profit growth.

In September annual inflation remained unchanged at 2.1 percent.

2.

THE INTERNATIONAL ECONOMY World growth is projected to slow from 5.0 percent in 2007 to 3.75 percent in 2008.

The crisis of confidence seen in the US and European banking sectors has resulted in the IMF downgrading the prospects for future growth.
Growth expectations for 2009 have been cut by 75 basis points to 2.2 percent.

The advanced economies are now forecast to contract on a full year basis in 2009.

Such a large decline has not been seen since the post-war period.

Figure 1: World GDP Growth (Percentage change, Annual Data) % 6.0 5.0 4.0 3.0 2.0 1.0 0.0 % 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2001 2002 2003 2004 2005 2006 2007 2008f 2009f Source: IMF Global action has been prompted in an effort to support the financial markets.
Several fiscal stimulus packages have been detailed and most developed economies have relaxed their monetary policy in an effort to stimulate growth.

The US Economy According to advance estimates the US economy contracted on the previous quarter.

Gross Domestic Product (GDP) fell by 0.2 percent on the quarter.

This primarily reflects the decline in personal consumption expenditure.

Despite a slow down in the third quarter net trade continued to contribute positively to growth.
Looking forward, there are concerns over the level of personal consumption expenditure as low confidence, rising unemployment and higher cost of borrowing begin to impact the level of disposable income.

Annual CPI inflation fell slightly to 4.9 percent in September.

This slight fall is due to the fall in energy prices as they return to lower levels after record highs.
8 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Europe GDP declined by 0.2 percent for the Euro area in the third quarter of 2008, compared to the previous quarter.

However, growth was still 0.8 percent higher than the same quarter last year.

Inflation in the Euro area fell by 0.1 percent on the quarter.

Annual inflation also declined to 3.5 percent.

These declines are expected to continue as the global oil price continues to fall.
Figure 3: Euro-area GDP and CPI (Year-ended Percentage Change, Quarterly Data) 6 % 5 4 3 2 1 0 -1 GDP CPI 6 % 5 4 3 2 1 0 -1 1998 1996 Source: Eurostat 2000 2002 2004 2006 2008 Australia The September quarter saw growth in GDP slow to 0.1 percent on the quarter and 1.9 percent on the same quarter last year.

Australia appears to be following the downward cycle across the globe and further impacts are expected to be felt as the prices of commodities fall and house prices continue to fall.
Annual inflation rose to 5 percent in September an increase of 0.5 percent on the previous month.

This is expected to ease as the price of oil is expected to remain low.
Figure 4: Australia CPI and GDP (Year-ended Percentage Change, Quarterly Data) 7 % 7 % GDP CPI* 6 5 4 3 2 1 0 1996 1998 2000 2002 2004 2006 2008 6 5 4 3 2 1 0 *Adjusted for adjust it for interest changes prior to the September quarter 1998 and adjusted for tax changes of 1999-00 Source: Reserve Bank of Australia New Zealand The New Zealand economy is contracting as growth fell by 0.2 percent in the June quarter.

Annual growth now sits at just 1 percent.


The growth rate is expected to contract further in the September quarter following the global slowdown.

New Zealand saw inflation rise in the September quarter to 5.1 percent in comparison to the same quarter last year.

The inflation rate for the quarter itself was also high at 1.5 percent.
Figure 5: New Zealand CPI and GDP (Year-ended Percentage Change, Quarterly Data) 7 % 6 5 4 3 2 1 0 -1 GDP CPI 7 % 6 5 4 3 2 1 0 -1 1996 1998 2000 2002 2004 2006 2008 Source: Reserve Bank of New Zealand 9 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Market Developments.

The pattern of monthly exchange rate movements of some of the world’s most prominent currencies is shown below in 1990 prices (i.e.

1990=100).
1990=100).

Figure 6: Exchange Rates (Effective Exchange Rate; Index 1990 =100) Australian Dollar US Dollar NZ Dollar Euro 140 Index 120 100 80 60 140 Index 120 100 80 60 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Bank of England The Australian dollar has been depreciating in recent months.

At the end of September the real effective exchange rate had fallen to AUD89.2 in 1990 prices.

The New Zealand dollar followed suit and ended the month at NZD100.6, while the Euro stood at EUR100.8.
In contrast, the US dollar appreciated as new debt was issued in the US to raise funds for the rescue plan for the financial sector.

At the end of September the effective exchange rate was at a 13 month high of USD86.6.

Short Term Interest Rates The graph below shows the pattern for short term interest rates for some of the world economies relevant to Vanuatu.

The rate shown in each case is a 3 month or 91 day money market rate.
Figure.7: Short-Term Interest Rates (Monthly Data) 12 % 10 8 6 4 2 Australia NZ Euro Area US 12 % 10 8 6 4 2 0 1996 1998 2000 2002 2004 2006 0 2008 Source: Reserve Bank of Australia, Bank of Japan, Bank of England, European Central Bank.

Short term interest rates fell slightly as uncertainty over the global market place continued and fiscal and monetary stimulus packages encouraged consumers to spend rather than save.
Short term interest rates in the US fell to 1.2 percent in September from 1.9 percent in June.

Long term interest rates.

The graph below shows the changes in long term interest rates in some of the world’s major economies.
Figure 8: Long-Term Interest Rates (Monthly Data) Australia Japan Euro Area US % 14 12 10 8 6 4 2 0 1990 1993 1996 1999 2002 2005 2008 % 14 12 10 8 6 4 2 0 Source: Reserve Bank of Australia, Reserve Bank of New Zealand, European Central Bank, Bank of England The long term interest rates followed the declining trend of the short term interest rates.
The most dramatic 10 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Figure 10: Average Spot Price for Crude Oil (US$/barrel) 140 US$ 140 US$ Month Average Quarterly Average 120 100 80 60 40 20 0 1990 Source: IMF 1993 1996 1999 2002 2005 2008 Key Interest Rates 120 100 80 60 40 20 0 The third quarter of this year saw many Central Banks increase their interest rates.

New Zealand was the exception as the cut rates by 75 basis points to 7.5 percent.
The Reserve Bank of Vanuatu’s Monetary Policy Committee decided to increase the rediscount rate to 6.25 percent at their meeting on the 5th September 2008.

This will come into effect from Monday 8th September.

In the Committee’s judgment the strong performance of the Government and fast paced growth in credit have driven strong growth in the total supply of money.

The growth in the money supply will help support further growth in the economy as consumers spend more.
There were concerns over the inflationary pressures which will result from this and as such prompted the increase in the rediscount rate to curtail inflation and prevent consumer indebtedness as the credit market continues to grow.

At the time of writing many monetary stimulus packages were devised and several of the Central Banks in the advanced economies have drastically cut their interest rates in an effort to boost market confidence.
We will see the full extent of this in the last quarter of 2008. decline was seen in Australia where the interest rate fell from 6.5 percent in June to 5.8 percent in September.

Stock Markets The following graph shows the movements in share indices from some of the world’s largest markets.
Figure 9: Stock Markets (Indices) 8000 Index FTSE 100 S&P 500 7000 6000 5000 4000 3000 2000 1000 STOXX 50 ASX 200 Index 8000 7000 6000 5000 4000 3000 2000 1000 0 0 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Source: Financial Times, European Central Bank, Reserve Bank of Australia.

The stock markets continued on their decline as uncertainty remains in the financial market place.

Investors appear to be waiting to see how successful the international fiscal and monetary stimulus packages will be.
Oil Markets The price of oil increase to a high of USD147 in July, two months later, in the wake of the global financial crisis the price has fallen to just under USD100.

This sharp fall in price was prompted as OPEC fear that people demand less oil and will be willing to pay less for their oil, as the advanced economies go in to recession.

At the time of writing the price of oil was still falling as uncertainty over the full extent of the recession continues.
11 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Key Interest Rates (percent, end of period) 2006 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 US Fed Funds Rate 5.25 5.25 5.25 5.25 5.25 4.75 4.25 2.25 2.00 2.00 Euro Refi Rate 2.75 3.00 3.50 3.75 4.00 4.00 4.00 4.00 4.00 4.25 Australian Cash Rate 5.75 6.00 6.25 New Zealand Cash Rate 7.25 7.25 7.25 Vanuatu Rediscount Rate 6.00 6.00 6.00 6.25 6.25 6.75 6.75 6.75 6.75 7.00 7.50 8.00 8.25 8.25 8.25 8.25 7.50 6.00 6.00 6.00 6.00 6.00 6.00 6.25 Sources: US Federal Reserve, European Central Bank, Reserve Bank of Australia, Reserve Bank of New Zealand and Reserve Bank of Vanuatu 3.
DOMESTIC ECONOMIC DEVELOPMENT 3.1 REAL ECONOMY Domestic economic conditions in the September quarter continue to remain on the favourable side with all indicators showing improvement on the previous quarter.

Strong performance was reflected in the increase in tourism activity in line with the increase in visitor arrivals reflecting, the mid-year holiday season.
Although commodity prices have eased from a peak in the previous quarter, prime exports of copra, coconut oil, beef and kava improved significantly in the quarter in exception to cocoa.

and wholesales restaurants, The services sector is estimated to have grown in this quarter associated with the increased number of visitors which may have raised spending in hotels and retail, transportation and communication and Real Estate and Business services.
In the industry sector, the construction sector continues to dominate growth with work-in-progress in major projects.

In line with economic activity, consumption is estimated to have increased along with electricity consumption and cost in the quarter.

Consumption and investment continue to remain buoyant while similar indicators of private sector credit and Value Added Tax collections increased simultaneously over the year by 34 percent and 41 percent, respectively.
Inflation continues to remain high after strong growth in the previous quarters.

The Consumer Price 12 Index increase by 2.4 percent in the September quarter to be 6.0 percent over the year, mainly reflecting the global rise in food and fuel prices which eventually sank into increased prices in the domestic economy.

This led to the Consumer Price Index remaining at the top range of the Bank’s Annual Inflation target of 0-4 percent.
Although growth is projected for all sectors of the economy for the rest of the year, there are a few to economic performance.

The downside risks Agriculture sector, in particular prime agricultural exports, may face some shortfalls with the expected drop in commodity prices affecting domestic production.
Figure 11: Industry Sector (Annual Percentage Change) 30 % 25 20 15 10 5 0 Man u fac tu rin g C on s tru c tion E lec tric ity an d water T otal 30 % 25 20 15 10 5 0 2004 2005 2006 2007 2008 S o u r c e : Nat ion al S tatis tic s Offic e The economic slow-down in regional tourism-sourced markets could pose some restriction to growth in the tourism industry, and the services sector.
On the QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 positive side, the drop in global food and fuel prices could ease off inflationary pressures and the Industry sector is projected to be the major driver to growth the booming construction planned projects in 2008. inline with the year in Figure 12: Services Sector (Annual Percentage Change) D om es tic S ervs P ers on al S ervic es Govern m en t S ervic es R eal E s tate & B u s .

S erv F in an c e & In s u r. T ran s port& C om m .
H otels & R es t. Wh oles ale & R etail T otal 2008proj.

2007 1.2a.

Copra and Coconut Oil Copra production increased to 11,134 tons valued at VT532 million in the September quarter with all three months recording high monthly levels of production.

Over the last quarter, copra production increased by 14 percent to be 53 percent higher over the year.
This increase in the quarter is associated with both price increases boosted by the government subsidy on copra sector, and the strong increase in world commodity prices in the preceding months up to July.

Domestic prices for copra averaged VT48,000 per ton from a high level of VT52,000 per ton range in the mid-year.

This is inline with the price in the world market which declined by 19 percent over the quarter to US$817 per ton in the September quarter to be 35 percent over the year.
Prices remain attractive in the export market but are expected to decline towards the end of the year following slow growth in the global market export commodities.
the demand lowering for S ourc e: National S tatis tic s Offic e 0 5 10 % 15 Figure 14: Quarterly Copra Production & Prices Copra Oil Production Exports Copra Production Domestic Price '000 80 VT/Ton '000 16 Ton 12 8 4 GDP growth is projected to ease off from a 6.8 percent in 2007 to an estimated 6.0 - 6.6 percent in 2008 as estimated by the Ministry of Finance and Economic Management.

This is in line with downside risks to performance in the Agriculture and Service sectors towards the end of 2008.
Latest projections show Services sector growth to ease from 7.4 percent to 6.3 percent in 2008; Agriculture sector growth to increase slightly from 2.3 percent in 2007 to 3.7 percent in 2008; and Industry sector growth to expand from 10.3 percent in 2007 to 14 percent in 2008 (Figure 13) Figure13: Real Gross Domestic Product Growth (Major Sectors; Annual Percentage Change) 15 % 10 5 0 -5 -10 -15 15 % 10 5 0 -5 -10 -15 Forecast 1998 2000 2002 2004 2006 2008(p) Services Agriculture Industry Real GDP Source: MFEM, DESP, National Statistics Office 13 60 40 20 0 0 2000 2003 2006 2000 2003 2006 Source: Vanuatu Commodities Marketing, Board, CL Agencies In line with production, copra exports picked up strongly in the quarter recording a total of 11,917 tons valued at VT753 million in the September quarter.
This expenditure on major exports during the month of July is expected to flow through to export incomes in the rural areas.

Coconut oil exports increased slightly over the last quarter by 2 percent to 3,969 tons valued at VT246 million to be 26 percent higher than a year ago.

Export markets of Europe and New Zealand continues to remain prominent.
QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Domestic Economic Indicators Q307 Q407 Q108 Q208 Q308 4.0 4.1 3.6 3.9 6.0 Copra GDP Real Growth (%) Annual inflation rate (%) Production Copra(t) oil ship arrivals Cocoa(t) Beef(t) Coconut exports (t) Kava exports (t) Air (no.)
Cruise arrivals (no.)

Hotel Rate Energy Consumption (kWh) Quarterly Inflation rate (year-ended %) Inflation rate (quarterly %) Occ.

Production Copra(t) Cocoa(t) est.

oil Coconut exports(t) Kava exports (t) Air arrivals(no.)

Cruise arrivals(no.)

Energy Consumption * E ti 0.3 0.3 1.6 1.5 2.4 3,317 3,317 9,657* 9,914* 11,134* – 498 Beef(t) – est.
i 14,91 9 12,84 2 t VCMB & CL A NA N t A il bl 27,625 18,673 NA Figure 15: Quarterly Copra & Coconut Oil Exports Copra Exports Coconut Oil Exports '000 14 Tons 12 10 8 6 4 2 0 2000 2002 2004 2006 2000 2002 2004 2006 Source: National Statistics Office '000 14 Tons 12 10 8 6 4 2 0 14 Average coconut oil price in the world market dropped by 17 percent over the last quarter to US$1,244 per ton, though they remain 35 percent higher than a year ago.
Commodity prices of major export commodities have start to ease from their peaks in July, as a result the average quarterly price declined slightly in September.

Figure 16: Major Export Commodity Prices (Average World Prices; Quarterly Data) Coconut Oil US$ 1600 /Ton 1200 800 400 US$ 4000 /Ton 3000 2000 1000 Beef Cocoa 0 2000 2002 2004 2006 2008 2001 2003 2005 2007 0 Source: National Statistics Office 1.2b.
Cocoa this reflect sector may While data on cocoa production is yet to be increased released, production during this time frame, a seasonal trend in cocoa production.

Exports increased over the last quarter by 155 percent to 530 tons valued at VT135 million, however they dropped by 28 percent over the year, demonstrating an ease in growth in 2008.

Average domestic price remain at VT100,000 per ton for 1st grade cocoa sold to VCMB.
Average quarterly commodity prices in the world market rose slightly by 2 percent over the last quarter to 282 US Cent/Kg or US$2,820 per ton.

1.2c.

Kava In the September quarter, Kava exports grew strongly to 106 tons valued at VT160 million.

This was 62 percent higher than the last quarter and 63 percent higher than year ago.

While commodity prices declined slightly in line with the world price.

Both the local and export markets continue to remain competitive.
QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 1.2e.

Tourism Increased aircraft capacity from additional flights and increased cruise-ship calls contributed to the increase in visitor arrivals to the country in the September quarter.

Non-resident visitor arrivals increased to 46,298 in the September quarter, up by 24 percent over the June quarter and 24 percent over September 2007.

This growth was manifested in increase in both air and cruise-ship arrivals.
Air arrival visitors grew by 34 percent over the month to 27,625 visitors.

The average length of stay for visitors increased from 8.8 days to 10 days in the quarter.

The Australian market continues to dominate visitor arrivals into the country accounting for approximately 56 percent of total visitors registering 15,563 visitors, followed by New Zealand visitors registering 5,237 visitors.

Australian visitors increased by 24 percent over the last quarter to be 19 percent over a year.
This was closely followed by Europe, New Caledonia, New Zealand and other Pacific Country visitors.

As a joint result of the seasonal trend in arrivals and increased aircraft capacity, holiday visitors grew by 40 percent over the last quarter and 13 percent over September 2007.

Consequently, the three months ending September, all recorded high level of holiday visitor arrivals which peaked in September.
Cruise-ship visitors increased by 12 percent to 18,673 visitors in the September quarter, inline with the start of the holiday seasons.

This was in line with the increased P&O Cruise-ship visitation in the quarter to 10 calls compared to 8 calls in the June quarter.
remain tourism Although favorable, indicators further indications of a slowdown in major tourist markets of Australia and New Zealand continue to pose downside risks to visitors arrivals in the remaining months of the year as visitors may postpone holiday plans.

Increased aircraft capacity and competitive flight fares offered by airline carriers, Air Vanuatu and Pacific Blue, could offset this fall, however, these risks remain for future months to come.
Figure 17: Quarterly Kava Production 1600 Tons Domestic Consumption Exports Total 1400 1200 1000 800 600 400 200 0 1600 Tons 1400 1200 1000 800 600 400 200 0 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Source: National Statistics Office 1.2d.

Beef The beef sector continued to perform well in the September quarter, with total production estimated to have increased by 23 percent to 940 tons.

There was increased output from both major abattoirs – Santo Meat Packers Ltd and VAL Pacific Ltd.
Beef exports increased to 252 tons valued at VT122 million to be 42 percent over the last quarter and 43 percent over a year ago.

Likewise, the domestic market and export market continues to remain competitive.

Average beef price in the world market increased over the last quarter by 12 percent to US$3,724 per ton.
Figure 18: Quarterly Beef Production (Major Abattoirs) Santo Meat Packers Ltd Vanuatu Abattoirs Ltd Total 1200 Tons 1000 800 600 400 200 1200 Tons 1000 800 600 400 200 0 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 0 Source: National Statistics Office 15 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 .

Housing Utilities increased slightly by 2.4% and Household Supplies by 2.9 percent.

Clothing & footwear declined over the last quarter to be 0.6 percent over the same period of 2007.
This category is the one of the few to have shown a decline mainly relating to the import pattern of clothing towards the Asian countries.

Recreation, Education, Health, etc category also experienced a decline.

Figure 19: Quarterly Non-Resident Visitor Arrivals 60 No.

'000 60 No '000 Cruise Ship Visitors Air Visitors Total 50 40 30 20 10 0 50 40 30 20 10 0 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Source: National Statistics Office 1.2f.
Inflation The Consumer Price Index continues to establish significant growth registering 2.4 percent over the last quarter to be 6.0 percent over the year.

The strong growth in prices largely reflected the strong global increase in food and fuel prices during this period.

The increase in food prices contributed 4 percent to overall Inflation while transport costs contributed 0.9 percent.
Alongside surging commodity prices in the period, demand for fuel and food imports also pushed prices higher in the quarter.

Compared to the previous quarter, prices were up for the following categories: Food (5.5%), Transport & Communication (2.5%) and household supplies (1.7%).
Likewise, compared to a year ago, the major categories attributing to the 6.0 percent increase over (11.3%), followed by Transportation & Communication (7.2%) and Drinks & Tobacco (5.8%) contributing a the to growth larger proportion reviewed quarter the year were Food in prices in Figure 20: Consumer Price Index (Percentage Change) % 7 6 5 4 3 2 1 0 -1 Year-ended Quarterly 7% 6 5 4 3 2 1 0 -1 Mar-00 Mar-02 Source: National Statistics Office Mar-04 Mar-06 Mar-08 16 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 3.2.
FISCAL OPERATIONS The third quarter of 2008 ended with a fiscal surplus of VT824.6 million.

This is an improvement of VT471.1 million from the surplus of VT353.5 million seen in the previous quarter.

The improvement in this quarter was mainly due to the seasonality of grants received, as Australia begins its financial year in June.

Another large instalment of the MCA grant was received in this quarter.
This was accompanied by increases in domestic revenue collection, and a decline in fiscal expenditure to VT3735.8million compared to the recorded VT4304.3million during the last quarter.

Figure 21: Government Budget Balance (Levels; Billions of Vatu; Quarterly Data) Surplus/Deficits Revenue Expenditure 5 VTb 4 3 2 1 0 -1 -2 -3 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Source: Ministry of Finance 3.2a.
Revenue 5 VTb 4 3 2 1 0 -1 -2 -3 in Total revenue increased the September quarter was Total revenue VT4560.5million.

by 31.8 percent over the same period last year and is 2.1percent lower than the preceding quarter.

Domestic revenue contributed 75.5 percent of all revenue while the remaining 24.5 percent was made up by grants from abroad.

The strong growth over the year is mainly driven by strong level of grants received from abroad during this quarter – primarily the large inflows from MCA funds.
Domestic revenue contributed significantly to growth, underpinned by non-tax revenue and taxes on international trade.

Taxes on the use of goods made a significant contribution from VAT.
17 Fig 22: Fiscal Revenues (Contributions to Year-ended Growth*; Quarterly Data) 70 % Grants Tax Revenue Non-tax revenue Total 60 50 40 30 20 10 0 -10 -20 -30 70 % 60 50 40 30 20 10 0 -10 -20 -30 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 **Total growth equals the weighted sum of the growth in the components Source: Ministry of Finance year Recurrent revenue, which comprises taxes on goods, international trade, and taxes on other goods, increased by 17.1 percent over the same period The good to VT3445.2million.
last performance was underpinned by the fact that tax collections and compliance levels have improved.

VAT collections increased by 33.8 percent over the year to September and currently represent 46.2 percent of Import duties increased strongly over the year, rising by 19.2 percent to represent 35.2 percent of all tax revenue.

tax revenue.

total Grants received during the September quarter amounted to VT1115.2million.
This is 35.0 percent lower than last quarter but some 278.6 percent higher than the same period last year.

The MCA contribution accounted for 65 percent, of total grants.

3.2b.

Expenditures Total expenditure and net lending increased by 26.4 percent to VT3.7 billion, compared to the same period last year.

This annual increase is attributed to the large increases, some 357.2 percent, in development expenditure.
This more than offset the 0.9 percent drop in recurrent expenditure over the same period last year.

Total expenditure and net lending dropped by 13.3 percent in September quarter.

This reflected tight expenditure control on the recurrent budget QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 including which saw declines of 9.6 percent and 0.9 percent on a quarterly and annual basis, respectively.
These declines were the result of a reduction in major expenditure areas level of expenditure on goods and services which fell by 11.9 percent.

This was accompanied with a 42.8 percent drop in the acquisition of fixed capital assets.

The decline in expenditure on goods and services stemmed from the substantial drop in wages and salaries over the quarter.

the 3.2d.
the 3.2d.

Outstanding Government Debt debt public remains domestic Total at VT2982million, which is VT40,000 less compared to the same period last year.

The Government is planning to retire some of the maturing bonds during the next quarter while the remainder will be rolled over.
Figure 24: Outstanding Government Bonds (Government Bond Holders; Value of Bonds Held) Figure 23: Fiscal Expenditures Contributions to Year-ended Growth**; Quarterly Data) 75 % 75 % 4 VTb RBV Commercial Banks Total Oustanding Public Corperation Others 4 VTb 60 45 30 15 0 -15 -30 -45 Other Development Expenditure Recurrent Expenditure Total 60 45 30 15 0 -15 -30 -45 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 **Total growth equals the weighted sum of the growth in the componants.

Source: Ministry of Finance 3.2c.


Financing 3 2 1 0 1998 2000 2002 2004 2006 2008 Source: RBV 3 2 1 0 continued The Government tight expenditure control and strengthened itself in revenue collection areas during the quarter.

This allowed the Government to repay some of its external loans.

implement to Fiscal performance during the year to September was favourable.

Total revenue collected to date stood at VT12385million, which is 84 percent of total expected revenue for 2008.
Total accumulated expenditure stood at VT1113.8million accounting for 75.9 percent of the figure projected in the 2008 budget.

The result of these figures combined was an accumulated total financing surplus of VT1248.7million for January to September.

Excluding all grants from abroad and development expenditure, domestic fiscal activities alone produced a the period healthy surplus of VT807.1million for January to September 2008.
18 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 3.3 FINANCUAL CENTRE DEVELOPMENT 3.3a.

Shipping Registration Figure 25: Companies Registry (Number of Companies; Quarterly Data) No 7 ('000) 6 5 4 3 2 1 No 7 ('000) 6 5 4 3 2 1 0 1998 2000 2002 2004 2006 2008 Exempt Companies International Companies Local Companies Overseas Companies Total Source: Vanuatu Financial Service Commision 0 total amount, Total company fees collected by the VFSC during the quarter were VT104million.
This is a seasonal drop of 18.7 percent compared to last quarter.

Of contributed the fees 77.1percent, 14.8percent, local companies fees 4percent and business fees and trust companies fees with 3.5percent and 0.6percent respectively.

stamp duty international companies During the quarter there were 45 new registrations recorded in the shipping register, but this was offset by an equal number of deregistrations during the quarter.
This leaves total number of ships on the registry unchanged at 610 ships, which is 8 ships the ships total higher corresponding quarter of last year.

registered than in Total shipping fees collected by the Vanuatu (VMSL) stood at Marine-time Service Limited VT34.78million, an increase on the quarter and the year by 20.3 percent and 9.7 percent respectively.

funds held under Marine total In contrast, Participation and (MPIF) Investigation decreased to VT995,000 from the VT2.04million in the last quarter.
Compared to the same quarter last year this is down by -58.2 percent.

Fund 3.3b.

Company Registration (VFSC) Total number of companies on the Vanuatu Financial Services Commission registry at end September quarter was 4721 companies.

This is three companies higher than recorded during the previous quarter.

The increase is mainly attributed to the increase in the number of international and overseas companies, while local and exempt companies decreased by 9 and 7 companies respectively.
In terms of licensed holdings, 15 companies hold a license as insurance trust companies, 11 as companies, 7 as exempt banks and 2 as exempt financial institutions.

During the quarter 108 fresh registrations were recorded while 54 were from the companies fresh to register.

Contributions registration during that international companies make up 71.3 percent, local companies 26.9 percent, and overseas companies 1.9 percent.

There are no new registrations recorded for exempt companies during the quarter.
recorded the quarter revealed the 19 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 3.4 MONETARY DEVELOPMENTS Growth in total money supply (M2) slowed to 0.9 percent in the September quarter to reach recorded a VT57,699.5 million; however substantial growth of 15.5 percent compared to a year ago.

The quarterly decline in money supply reflected declines in commercial banks net foreign assets and net credit to the Government (Figure 26).
it Figure 26: Contributions to Money Supply Growth (Levels; Billions of Vatu) Bvt 60 50 40 30 20 10 0 -10 Total Money Supply Net Foreign Assets Private Sector Credit Government Net Credit Position 60 Bvt 50 40 30 20 10 0 -10 Sep-98 Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 Sources: Commercial banks,Credit Corp,RBV Following the decline in money supply, commercial banks liquidity1 continued to trend downwards during the quarter.
The persistent tight liquidity in the banking system caused the RBV to refrain from issuing new RBV notes during the third and fourth week of September.

As a result the level of RBV notes outstanding was reduced significantly.

In fact the RBV has assisted in injecting liquidity through maturing RBV notes.

tight liquidity situation, prompted less The competition in the OMO market hence short-term interest rates on the 91-days RBV notes declined over the quarter.
However, they continued to remain high as compared to the previous years.

The tight market conditions have also triggered upward pressure on deposits interest rates, while lending interest rates have been stable over the quarter.

During the quarter, the Reserve Bank has tightened the its monetary policy stance by rediscount rate by 25 basis points to 6.25 percent.

increasing 1 Commercial banks liquidity consists of commercial banks excess reserves and holdings of RBV notes.
20 The purpose of this increase was to curtail inflation due to its linkages to private sector credit and money supply.

Determinants of Money Supply Net Foreign Assets Total net foreign assets (NFA) contracted by 4.9 percent during the quarter, although it was higher by 9.9 percent over the year (Figure 27).

The overall increase in NFA during the quarter was largely attributed to a decline in commercial banks holdings of NFA which offset the expansion in the NFA holdings monetary authorities.

level.
level.

The quarter Commercial Banks’ NFA fell by 7.7 percent on the quarter but was 11.1 percent higher on the previous year’s to quarter decline stemmed from the combined effects of a reduction in commercial banks foreign assets by 4.8 percent and an increase in commercial banks foreign liabilities by 5.4 percent.

The increase in commercial banks foreign liabilities was due to an increase in the number of non-residents fixed depositors associated with one bank during the quarter.
Additionally, residents demand and term deposits denominated in foreign currency have noted declines, therefore partly attributed to the downfall in commercial banks NFA during the quarter.
Figure 27: Net Foreign Assets (Levels; Billions of Vatu) 45 Bvt 40 35 30 25 20 15 10 5 Monetary Authorites Commercial Banks Total 45 Bvt 40 35 30 25 20 15 10 5 0 Sep-98 Sep-00 Sep-02 Sep-04 Sep-06 0 Sep-08 Sources: Commercial banks,RBV Monetary authorities’ holdings of NFA expanded by 2.0 percent during the reviewed quarter, to be 7.3 percent higher over the year.

This indicates that the Reserve Bank made net purchases of foreign QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 exchange during the quarter.
The bulk of the inflows were via cash grants from a donor the Government and interest received on the RBV’s investments abroad.

These inflows outweighed outflows of foreign exchange destined for import financing to commercial banks.

to The level of the country’s official reserves stood at 7.3 months of import cover at the end of the quarter – well in excess of the RBV’s minimum requirement of 4 months cover.
Domestic Credit Domestic credit expanded by 9.1 percent during the September quarter, to be 35.9 percent higher over the year.

The expansion in the quarter stemmed from increases in loans extended to the private sector, non-financial public enterprises and municipalities.

This more than offset a further decline in net Government sector borrowings.
the annual growth Outstanding loans and advances2 extended to the private sector slowed by 50 basis points from the June quarter to 10.1 percent in the September rate quarter.

However accelerated to 41.3 percent.

The rapid growth over the year to September 2008 reflected the increase in the share of the credit market from 3 banks in 2007 to 4 in 2008.

The increase in private sector credit over the quarter was spread across majority of the economic sectors.
The exceptions to this were agriculture; manufacturing and financial institution sectors which recorded declines in credit over the quarter (see Table 9 in Appendix).

The upward trend in private sector credit is in line with the broad expansion of economic activity.

Figure 28: Private Sector Credit (Billions of Vatu and Percentage change) 2 Loans to the private sector, beginning QTR1 2008 includes loans extended by Credit Corporation.
21 50 VTb 40 30 20 10 0 -10 Year-ended percentage change Level Quarterly percentage change 50 % 40 30 20 10 0 -10 1998 2001 2003 2006 2008 2000 2003 2005 2008 Source:Commercial banks, Credit Corp, RBV Lending to non-financial public enterprises rose by 0.7 percent to be 4.8 percent higher over the year, and credit to municipalities increased by 13.3 percent to be 17.0 percent higher over the year.
Figure 29: Private Sector Loans (Share of Total Loans; September quarter 2008) Others 20.2% Housing & Land Purchases 32.8% Tourism 6.5% Construction 8.9% Distribution 10.2% Personal 21.3% Housing & land loans continued to be the dominant sector accounting for 32.8 percent of the total loans during the quarter.

This represents a slight increase from 32.4 percent noted in the previous quarter.
Personal loans maintained its position as the second major holder of total loans of 21.3 percent, up from 20.3 percent noted the previous quarter.

in Distribution accounted for the third largest share of loans by increasing its share from 8.7 percent from the previous quarter to 10.2 percent during this quarter.

This was followed by the construction sector which was 9.1 percent of the loan book, noting an increase from 8.9 percent in the previous quarter.
The tourism sector followed closely with 6.5 percent QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 of total loans, a reduction from 6.9 percent in the previous quarter.

system improved further during The Government’s net credit position vis-à-vis the the banking September quarter.

This was attributed to the decline in monetary authorities net lending to the Government which declined by 24.6 percent and more than offset the increase of 41.7 per cent in the Government’s net lending from commercial banks.
This improvement showed that the Government has accumulated its deposits with the Reserve Bank.

This trend was in line with the fiscal statistics, which showed the Government recording a budget surplus during the quarter.

Overall, the Government’s net credit position with the banking system continued to remain comfortable over the year to September 2008.
Figure 30: Net Debt Position of Vanuatu Government (Vis-à-vis the Total Banking Sector; Billions of Vatu) 3 Bvt 3 Bvt Total Commercial Banks (net) Monetary Authorities (net) 2 1 0 -1 -2 -3 Sep-98 Sep-00 Sources: Commercial banks,RBV Sep-02 2 1 0 -1 -2 Sep-04 Sep-06 -3 Sep-08 Measures of Money Supply The overall fall in money supply during the quarter was mirrored in a decline in narrow money (M1).

Quasi money noted a slight increase in growth.

(Figure 31).
(Figure 31).

Figure 31: Money Supply Components (Levels; Billions of Vatu) 22 M1 Quasi-Money Total 60 Bvt 50 40 30 20 10 60 Bvt 50 40 30 20 10 0 Sep-98 Sep-00 Sep-02 Sep-04 Sep-06 0 Sep-08 Source: Commercial banks, RBV Following an expansion noted over the previous quarter, narrow money fell by 3.1 percent during this quarter.

However, the annual growth was higher by 8.5 percent over the year.

The contraction in M1 during the reviewed quarter reflected declines in all its components.
Currency outside banks fell slightly by 0.1 percent, while demand deposits declined by 3.8 percent.

The trend in demand deposits stemmed from a decline of 8.4 percent in demand deposits denominated in foreign currency which outweighs an local currency increase of 0.2 percent component.

its in The decline in demand deposits denominated in foreign currency was related to a decline in the number of resident’s foreign currency depositors during the quarter.
Currency outside banks which has seen increases over the previous two quarters that this quarter declined during currencies which have been in circulation have been deposited back into banks.

This has effected the increase in demand deposits denominated in the local currency.

Overall, the annual growth of narrow money indicated that money flow was still sufficient to accommodate for increasing economic the activities occurring in the economy.
indicating Quasi-money growth was higher by 0.2 percent from the previous quarter, and 19.3 percent above the previous year’s level.

The increase during the quarter was attributable to time and savings deposits denominated in local currency which grew by 5.3 percent.

This trend reflected the increase in deposit interest rates during the quarter.
Time and foreign savings deposits denominated the in QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 currency fell by 4.0 percent, due partly to the decline in residents’ foreign currency depositors.

Composition of Commercial Banks Deposits In accordance with the decline in M2, the value of Commercial Bank’s liabilities to resident depositors (excluding Government deposits) fell by 1.0 percent to reach VT54,028 million in the quarter.
However, a growth of 15.8 percent was recorded over the year to the September quarter.

Individual accounts continued the share of deposits accounting for 54.7 percent of deposits.

Private businesses comprised the second largest share of 38.0 percent; non financial public enterprises, other sectors, and financial municipalities shared the remaining 7.3 percent share of total deposits.
to dominate institutions exempt Interest Rates The liquidity shortages in the banking system during the quarter triggered upward pressures on term deposits interest rates.

This caused the weighted average interest rate on term deposits to increase by 31 basis points to 5.44 percent during the quarter and the weighted average interest rates for total Bank deposits increase by 44 basis points to 2.56 percent.
Lending interest rates remained constant over the quarter, with the exception of the maximum interest rates on housing and land loans which rose by 315 basis points during this increase, the weighted average rate of interest for bank loans fell further by 4 basis points to 10.03 percent in the reviewed quarter.

(see Table 11 in Appendix).

the quarter.


Despite Interest Rates Spread The effect of the movements in the weighted average interest rates on deposits and lending caused the interest rate spread to further narrow by 48 basis points to 7.47 percent in the reviewed quarter.
Figure 32: Interest Rate Spreads (Spread between Average Lending and Deposit Rates) 13 % 12 11 10 9 8 13 % 12 11 10 9 8 7 7 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Source: ANZ.WBC,NBV,BRED Reserve Money Reserve money3 expanded further by 4.5 percent over the September quarter.

The expansion was largely attributable to SRD and excess reserves which recorded increases of 10.8 percent and 16.4 percent, respectively.

Currency in circulation, on the other hand, fell by 1.3 percent during the quarter.
The increase in commercial banks excess liquidity over the quarter mainly reflected the suspension of the open market operations over the third and fourth week of September due to the tight liquidity condition of Banks.

As a result RBV notes outstanding declined significantly by 79.2 percent the quarter.

in 3 Reserve Money comprises of currency in circulation, Statutory Reserve Deposit (SRD) and Excess Reserves.
23 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Allotments made in terms of notes issued during the quarter were as follows; VT680 million were allotted to the 7 days maturity, VT545 million to the 14 days maturity, VT390 million to 28 days while VT275 million and VT40 million were allotted to 63 days and 91 days, respectively.
Of the total notes issued, 35.23 percent of the total notes were allotted to the 7 days maturity, 28.24 percent was taken up in the 14 days maturity, 20.21 percent were allotted to the 28 days maturity, 14.25 percent was allotted to the 63 days maturity, while the remaining 2.07 percent share of total notes were related to the 91 days maturity.

Total outstanding RBV notes at the end of the quarter under review were recorded at VT240 million compared to VT1,155 million at the end of the previous quarter.
Yields for 91 days maturities remained high at 4.94 percent at the end of September quarter relating to an issue in early August.

The persistent high interest rates reflect the tight liquidity situation that started at the end of July and remained throughout the quarter.
Figure 35: 91-day RBV Notes (Accepted Coupon Rate; Percent) 6 % 5 4 3 2 1 0 % 6 5 4 3 2 1 0 Sep-2002 Sep-2004 Sep-2006 Sep-2008 Source: RBV Figure 33: Components of Reserve Money (Levels; Billions of Vatu) Currency in circulation Excess reserves SRD Bvt 5 4 3 2 1 Bvt 5 4 3 2 1 0 Sep-98 Sep-00 Sep-02 Sep-04 Sep-06 0 Sep-08 Source: Commercial banks,RBV 3.5 MONEY MARKET DEVELOPMENTS A tight liquidity condition which persisted in the domestic money market during the quarter has culminated in a reduction in the number of OMOs conducted.
Consequently, only a total of VT1,930 worth of RBV Notes were issued compared to VT3,620 million and VT4,370 million in the second and the first quarter of the year respectively.

On the other hand, VT2,745 million worth of RBV notes were maturing, which has brought the total value of RBV notes outstanding to VT240 million at the end of September.
Figure 34: Commercial Banks Liquidity (Billions of Vatu) Bvt 4 Excess Reserves RBV Notes Total 3 2 1 Bvt 4 3 2 1 0 Sep-98 Sep-00 Sep-02 Sep-04 Sep-06 0 Sep-08 Sources: ANZ,WBC,NBV,BRED,RBV 24 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 3.6 BANKING SECTOR DEVELOPMENTS Domestic Banks - Statement of Financial Position Figure 36: Asset Position – Domestic Banks (Levels; Billions of Vatu; Quarterly Data) 90 VTb 80 70 60 50 40 30 20 10 Foreign Domestic 90 VTb 80 70 60 50 40 30 20 10 Capital Figure 37: Capital Adequacy & Tier 1 Ratio Capital Base (LHS) Tier 1 Capital (LHS) Risk-weighted Assets (LHS) Tier 1 Capital to Total Risk-weighted Assets (RHS) Capital Base to Total Risk-weighted Assets (RHS) 25 VTb 20 15 10 5 0 50 % 40 30 20 10 0 0 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 0 Sep-08 The banking industry’s asset position continued to grow over the September quarter, rising by 0.5 percent to Vt78.1 billion (Jun-08: Vt77.7 billion).
The increase is mainly attributable to growth in domestic assets by 5.4 percent to Vt40.1 billion (Jun-08: Vt38.0 billion).

Much of this growth is sourced from growth in private sector credit by 9.8 percent to Vt30.9 billion (Jun-08: Vt28.2 billion).

Foreign assets, however, declined by 4.3 percent to Vt37.9 billion (Jun-08: Vt39.6 billion), as a result of a 4.6 percent decrease in balances due from banks to Vt36.4 billion (Jun-08: Vt38.1 billion).

Refer to figure 36.
Refer to figure 36.

Total liabilities (less capital) grew by 0.5 percent over the quarter to Vt68.8 billion (Jun-08: Vt68.4 billion).

The growth over the quarter reflects a 4.3 percent increase in foreign liabilities to Vt11.8 billion (Jun-08: Vt11.4 billion).

Domestic liabilities declined by 0.2 percent to Vt56.9 billion (Jun-08: Vt57.0 billion), as a result of a 5.3 percent decline in foreign currency deposits to Vt27.4 billion (Jun- 08: Vt28.9 billion).
Vatu deposits rose by 3.7 percent to Vt26.9 billion (Jun-08: Vt26 billion).

Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 in The industry continued to maintain a sound capital base the September quarter depicting an increase of 5 percent to Vt8.3 billion (Jun-08: Vt7.9 billion).

This is driven by a positive growth in disclose reserves and retained earnings by 7.3 percent to Vt5.5 billion (Jun-08: Vt5.1 billion).
Despite this increase, the capital adequacy ratio fell from 34.1 percent on the previous quarter to 33.5 percent this quarter.

This is attributable to a 6.8 percent increase in total risk assets to Vt24.7 billion (Jun-08: Vt23.2 billion).

Refer to figure 37.

Statement of Financial Performance (before industry’s financial performance recorded The negative growth over the September quarter.
Total operating profit tax, write offs and provisions) declined by 3 percent to Vt515.4 million (Jun-08: Vt531.1 million), as a result of a 2.5 percent increase in operating expenses which more than offset a 0.9 percent increase in operating revenue (Figure 38).
25 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Figure 38: Earnings – Domestic Banks (Levels; Billions of Vatu; Quarterly Data) Figure 39: Asset Quality – Domestic Banks (Levels; Billions of Vatu; Quarterly Data) 2.0 VTb 1.6 1.2 0.8 0.4 0.0 2.0 VTb 1.6 1.2 0.8 0.4 0.0 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Operating Income net opertaing profit Operating Profit before tax, write-offs & provisions Operating Expenses The decrease in total operating revenue broadly reflects a 6.8 percent decline in non interest income to Vt518.7 million (Jun-08: Vt556.7 million), while the increase in total operating expense reflects a 6.7 percent growth in interest expense to Vt617.7 million (Jun-08: Vt578.9 million).
Taking into account provision and bad debts written off in the quarter, net profit declined to Vt74.2 million, as a result of a significant one off provisions allocated by one of the commercial banks.

The industry’s Return on Assets (ROA) fell from 0.7 percent to 0.6 percent, while Return on Equity (ROE) declined from 5.8 percent to 5.5 percent.

Asset Quality The industry recorded further growth in its lending book in the September quarter, rising by 9.2 percent to Vt32.2 billion (Jun-08: Vt29.5 billion).
Standard loans accounted for 87.7 percent, while substandard loans 2.2 percent, doubtful 9.1 percent and loss loans 1.1 percent (Figure 39).

Standard Substandard Doubtful Loss 35 VTb 30 25 20 15 10 5 0 35 VTb 30 25 20 15 10 5 0 Sep-05 Jun-06 Mar-07 Dec-07 Sep-08 The banks level of impaired assets (doubtful and loss loans) increased further over the quarter under review, rising by 8.6 percent to Vt3.3 billion (Jun- 08: Vt3.0 billion).
The increase also resulted in significant increases in banks specific provisions by 77 percent to Vt1.3 billion (Jun-08: Vt759.3 million) and general provisions by 3.8 percent to Vt100.8 million (Jun-08: Vt97 million).

Security held by banks also increased by 29.4 percent to Vt20.8 billion (Jun-08: Vt16.1 billion).

Sectoral Lending Lending to the private sector continued to grow strongly over the quarter of September 2008, rising by 9.7 percent to Vt31.8 billion (Jun-08: Vt28.9 billion).
Much of this growth is attributable to an 11 percent increase to Vt16.8 billion (Jun-08: Vt15.1 billion) in personal lending which accounted for 52.7 percent of total lending.

Lending to the distribution and construction sector also contributed to the overall growth rising by 29.2 percent and 7.3 percent to Vt3.2 billion (Jun-08: Vt2.4 billion) and Vt2.7 billion (Jun-08: Vt2.6 billion) respectively.
Lending to tourism and transport also saw marginal growth over the September quarter by 3.4 percent and 10.8 percent to Vt2.0 billion (Jun-08: Vt1.9 billion) and Vt1.4 billion (Jun-08: Vt1.3 billion) respectively.

Other major lending was to the manufacturing sector, however it has declined by 9.5 percent to Vt1.4 billion (Jun-08: Vt1.5 billion) (Figure 40).
26 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Figure 40 Private Sector Credit Domestic Banks (Share of total loans; by industry) Foreign Exchange Turnover 16 % 12 8 4 Tourism Manufacturing Personal Construction Transport Distribution 0 2004 2005 2007 2008 2005 2006 2008 60% 45 30 15 0 Liquidity Liquidity of banks remained relatively stable despite falling in the quarter.

During the quarter, the banks average Liquid Asset Ratio (LAR) was 11.9 percent down from 15.3 percent in the previous quarter.
The decrease follows the reduction of banks LAR requirement from 12 to 8 percent in November 2007, as well as the current competitive environment.

The bank LAR is closely monitored by RBV to ensure compliance with the regulatory requirement.
Figure 41: Liquid Asset Ratio (Domestic Banks) 30 % 25 20 15 10 5 Minimum Regulatory Requirement (8 per cent) 0 2003 2004 2005 2006 2007 2008 30% 25 20 15 10 5 0 27 Figure 42: Foreign Exchange Turnover Position of Domestic Banks 10 VTb 9 8 7 6 5 4 3 2 1 0 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Turnover against the Vatu Cross-currency Turnover against the USD 10 VTb 9 8 7 6 5 4 3 2 1 0 The industry’s total foreign exchange turnover grew strongly in the September quarter by 30.3 percent to Vt8.9 billion (Jun-08: Vt6.9 billion).
This is attributable to a 31.9 percent increase in foreign exchange turnover against the Vatu to Vt7.9 billion (Jun-08: Vt5.9 billion) as well as an increase in foreign exchange turnover against the USD by 20.3 percent to Vt1.1 billion (Jun-08: Vt908.5 million), partly due to the appreciation of the USD over the September quarter (Figure 42).

International Banks Overview The earnings of the offshore banking industry depicted a loss of USD145 million at the end of the September 2008 quarter.
Likewise, the industry’s financial position depicted a decline in its total assets, as a result of negative growth in loans and advances.

The industry is well capitalized at a ratio of 26.8 percent, well above the minimum requirement ratio of 8 percent.

Reserve Bank of Vanuatu (RBV), as part of its supervisory obligation has conducted prudential on- site visits to offshore banks over the quarter to ensure that their operations are prudent and in line with the regulations of Vanuatu.
During the quarter, the Bank conducted a one day workshop for their international banks directors to enhance QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Figure 44: Total Liabilities – International Banks (Levels; Millions of Vatu; Quarterly Data) 800 VTm 800 VTm 700 600 500 400 300 200 100 0 700 600 500 400 300 200 100 0 Sep-08 Sep-06 Mar-07 Deposits Term Debt & Other Borrowings Sep-07 Mar-08 Shareholder's Equity Total Liabilities and Equity Earnings Offshore industry reported a net loss of USD145 thousand during the 3rd quarter of 2008 (Jun-08: USD355 thousand).
This loss is attributable to a payout of a dividend by a single bank during the quarter.

Improvement, however, was noted on income earned before taxes of USD496 thousand compared to USD355 thousand earned over June 2008 quarter.

This reflects growth in net interest income earned over the quarter of 37.4 percent to USD529 thousand).

Non-interest income of USD2.1 million nearly offset the non-interest expenditures of USD2.0 million over the quarter.
(Jun-08: USD355 thousand The industry’s Return on Assets (ROA) and Return on Equity (ROE) ratios for Sept 2008 quarter are - 0.021 percent (Jun-08: 0.051 percent) and -0.100 percent (Jun-08: 0.245 percent) respectively.

knowledge on regulatory requirements of Vanuatu, the outcome was very successful.

Improvements were noted generally in all offshore banks physical presence in line with local regulation.

The number of offshore banks has decline from 8 to 7 over the quarter under review.
Statement of Financial Position The 3rd quarter of 2008 depicted negative growth in the industry’s statement of financial position of 0.59 percent (Jun-08: USD691.6 million) under its assets as a result of a decrease in loans by 17.4 percent to USD$46.9 million (Jun-08: USD56.8 million).

to USD687.5 million The major component of industry’s assets investments accounting for 73.3 remained as percent (USD503.8 million) of the industry’s total assets (Figure 43).
the Figure 43: Total Assets – International Banks (Levels; Millions of Vatu; Quarterly Data) VT 800 '000 700 600 500 400 300 200 100 0 VT 800 '000 700 600 500 400 300 200 100 0 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Loans & Advances Investments Cash Items Total Assets On the liability side, the industry’s total liabilities (excluding shareholders equity) decreased by 0.64 percent to USD543.4 million (Jun-08: USD546.9 million).
This is attributable to negative growth in both deposits, by 0.1 percent to USD517.2 million (Jun-08: USD517.2 million), and term debt by 16.1 (Jun-08: USD28.5 percent million).

to USD23.9 million The major components of liabilities are deposits which accounted for 75.2 percent of the total liabilities and shareholders equity (Figure 44).
28 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Figure 45: Earnings – International Banks (Levels; Millions of Vatu Quarterly Data) 2,400 Net Interest Net Profit Total Operating Expenses 1,600 800 0 -800 2,400 1,600 800 0 -800 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Capital The offshore banks capital base depicted an increase of 1.67 percent to USD144.13 million (Jun- 08: USD141.1 million) reflecting an appreciation of the USD.
However, capital ratios depicted a declining trend to 26.8 percent from 27.6 percent compared to June 2008 quarter.

Despite the decline in the above ratio, the ratio is still above the minimum ratio of 8 percent.

29 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 3.7 BALANCE OF PAYMENTS The September quarter recorded another surplus of VT276 million in Vanuatu’s balance of payments.
The current account deficit was reduced significantly while the surplus in the capital and financial accounts dropped by around 50 percent.

An outflow amount of around Vt400 million had not been captured in the statement as recorded in errors and omissions.

The improvement in the current account resulted from an improvement in exports, tourism earnings and official grants and more than offset an expansion in imports.
The capital and financial accounts on the other had dropped, largely due to reduced Foreign Direct Investment (FDI) flows offsetting FDI reinvestment earnings.
Figure 47: Net Reserves & Months of Import Cover (Quarterly Data) Mon th s of Im port C over (R igh t Axis ) Net R es erves (L eft Axis ) R B V m in im u m VT b 12 10 8 6 4 2 Mth s 10 8 6 4 2 Figure 46: Quarterly Current Account Balances (Levels; Billions of Vatu) 0 0 S ep-02 S ep-03 S ep-04 S ep-05 S ep-06 S ep-07 S ep-08 S ou rc e: R B V B alan c e on Goods Net In c om e C u rren t Ac c ou n t B alan c e B alan c e on S ervic es 6,000 VT m 4,000 2,000 0 -2,000 -4,000 -6,000 6,000 VT m 4,000 2,000 0 -2,000 -4,000 -6,000 S ep-02 S ep-04 S ep-06 S ep-08 S ou rc e: R B V With an expansion of surplus in the balance of payments over the quarter, the monthly import cover of reserves increased from 7.25 to 7.5 in the quarter.
This remains well above the Bank’s minimum target level of four months of import cover.

30 Merchandise trade The trade deficit was reduced by 7 percent over the quarter, as a VT0.5 billion increase in the value of imports could not offset a VT0.8 billion increase in exports.

Over the year the trade deficit has widened by 32 percent.

The high level of imports for the review quarter was expected as MCA activities give rise to increased demand.
Items that made significant contributions to the growth in imports were mineral fuel which rose by 46 percent); crude materials (up 20 percent) and basic manufacturers (up by 3 percent).

Most of Vanuatu imports come from Australia and the current low value of the Australian dollar against the Vatu is reflected in the high volume of import goods.

in Export earnings rose by 93 percent the September quarter.
All major commodities earnings increased over the quarter, with copra and coconut oil making the largest contribution to growth.

The strong increase in the world market price of copra (in addition to the government subsidy) boosted copra earnings by 363 percent in the September quarter.

Similarly, export earnings of coconut oil, kava, and beef and performed well in line with rising commodity prices.
Timber export earnings also recorded an increase following two consecutive falls despite the high domestic demand.

Exports destined the Melanesian Spearhead Group countries continued to dominate Vanuatu’s export markets.

Around 70 the European market and for QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 percent of export earnings are denominated in US dollars, and the appreciation of the US dollar against the Vatu in addition to favourable prices and conditions have motivated exporters during the quarter.
Services Account Generally, the services account in Vanuatu is in tourism surplus, reflecting industry.

Other major items include; transportation, communication and financial services all recorded an increase over the quarter.

the strength of the Freight payments are high in Vanuatu and usually comprise around 50 per cent of the total services payments account.
Most services items recorded low outflows during the quarter and hence posted an overall decrease in services payments offsetting high freight bills.

is seasonal in Vanuatu, which is a Tourism favourable holiday destination due to its climate and political stability.

The big increase in the number of visitor arrivals in the September quarter led to a large rise in tourism earnings.
Around 60 percent of tourists to Vanuatu originate from Australia and while the Australian dollar had begun to depreciate during the quarter, the high number of arrivals had contributed to significant inflows of Australian dollars into the economy.

Tourist arrivals from Australia are expected to slow down amidst the slowing Australian economy.
Figure 48: Tourism Earnings (Levels; Millions of Vatu; Quarterly Data) 5 VTb 4 3 2 1 Tourism Earnings 5 VTb 4 3 2 1 0 0 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Source: RBV Income Account The net income deficit contracted in the September quarter, by 35 percent, to VT124 million.

Vanuatu’s 31 income account is generally in deficit given the large amount of foreign direct investment re- invested earnings and distributed branch profits.
The rise in receipts during the quarter was partly attributable to adverse movements in the exchange rates.

the debit side, foreign direct On investment reinvested earnings was reduced while other interest payments particularly on investment currency and deposits side increased.

Current Transfers Account Net current transfers account was in surplus in the September quarter by VT1.1 billion.

Official grant through donor flows continued to dominate the current transfers account.
In addition to the major donor contributions, around VT800 million was granted as part of the Millennium Challenge Fund.

However, the net effect on government finances was negligible as the inflow was subsequently recorded as the New Zealand contractors.

remittance outflow to The estimate of Regional Seasonal workers (RSE) inflows (which is also known as workers remittances) has VT67 million estimated for last quarter.
Estimates were derived using a model and information provided by the labour office, workers agencies, commercial banks and money transfers.

Capital and Financial Account The balance in the capital account increased by 30 percent in the September quarter, reflecting a substantial increase in project-funded goods.

The acquisition of non-financial assets contributed significantly in this account, although it had recorded less property sales this quarter.
It is projected that aid in kind for capital related goods will be high in, 2009 and 2010 as the Millennium Fund projects progress.

The financial account recorded a deficit following two consecutive surpluses.

Foreign direct investment inflows contracted significantly during the quarter caused by a reduced fresh investment offsetting re- invested earnings of current equities.

Recording a surplus from the combination of the capital and financial, balance of payments financing continues to be adequate.
QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 INTERNATIONAL INVESTMENT POSITION By end September 2008, Vanuatu’s International Investment Position (IIP) had contracted its net borrowing position to VT6895 million, from VT9034 million at end June.

The new position reflected a decrease in the stock of liabilities, in particular, other investment offsetting decreases in external assets.
Medium Term outlook In the medium term (2008-2009), the current account deficit is expected to widen, underpinned by an increasing current account deficit and net income outflows, which are expected to more than offset any increase in tourism earnings.

Imports are expected to continue increasing solidly, reflecting the expansion of the economy and the large amount of capital investment expected to be injected into the MCA projects.
While reinvested earnings of foreign enterprises should continue to drive deficits in the income account, the projected improvement in tourism earnings should continue to boost the services account and partially offset this.

The capital and financial accounts are forecast to remain in surplus and may turn into small deficits in the medium term.

These are bound to fluctuate in line with investment particularly foreign direct unforeseen investment.
circumstances, official international reserves are expected to remain healthy at around 6-7 months of import cover at end 2008 and 2009. adverse Barring 32 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 such as The USD strengthened against most major currencies in September 2008.

It soared against commodity currencies the Australian Dollar but depreciated against other safe-haven currencies such as the Japanese Yen.
The USD strengthened against as the government issued new Treasury Bills to help finance the bail out plan for the banking sector.

The AUD lost grounds during the September quarter as fear for the health of the global economy, sluggish commodity prices and expectations of falling interest rates.

These expectations were accurate, with the Reserve Bank of Australia aggressively cutting interest rates by a total of 275 basis points over the four months to December.
The USD/AUD exchange rate is expected to remain low in line with the weakening outlook for commodity prices amid the global economic downturn.

The NZD also weakened in line with a sharp slowdown in economic growth.

The Vatu appreciated against the AUD and NZD but depreciated against the rest of the currencies.
3.8 EXCHANGE RATE DEVELOPMENTS in The global credit crisis entered a new phase in the September quarter 2008 as some large corporate the US and Europe undermined collapses confidence in the financial system.

This resulted in a further decrease in the availability of credit and led to a significant decline in consumer confidence, which in turn had significant affects on global equity and foreign exchange markets.
Figure 49: Vatu per USD & AUD Vanuatu Vatu Daily VT 110 Vatu per US$ (LHS) 105 100 95 90 J a VT 155 150 145 140 135 130 J a Vatu per AUD$ (RHS uly u e g p c t o e v c e a b p r r u n ul a y u e g p a F n - 0 8 0 7 Figure 50: Vatu per Euro & NZD Vanuatu Vatu Daily Vatu per Euro (LHS) Vatu per NZ$ (RHS) VT 96 92 88 84 80 VT 82 79 76 73 70 67 ly u e g p c t o e v c 0 7 a F n - 0 8 e a p r r b u n u l a y u e g p 33 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Exchange Rates of Major currencies (end period) Sept. 2008 1 month ago % change Vatu/USD 104.41 101.11 -3.3 months 3 ago 94.48 Vatu/AUD Vatu/NZD 83.96 70.15 86.58 70.78 3.0 0.9 90.82 71.92 % change -10.51 7.55 2.46 12 months ago 99.76 87.79 74.86 % change -4.5 4.6 6.7 Vatu/Euro 150.65 148.61 -1.4 149.10 -1.04 141.25 -6.2 34 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 EFFECTIVE DATE 8th July 2008 10th July 2008 2nd August 2008 NO.
BRIEF DESCRIPTION OF MAJOR EVENTS CHRONOLOGY OF MAJOR EVENTS 1.

2.

3.

The Reserve Bank new Board of Directors, whose chairman is the Director General of Agriculture, Jeffrey Wilfred announced a payment of VT213, 830, 795 to the Government as the Reserve Bank of Vanuatu’s dividend for 2007.

The total operating profit for the year 2007 was VT266, 216, 921 and a similar payment of VT105, 761, 861 was made during that year for 2006.
The bank’s revenue earnings derive mainly from the country’s foreign reserves which are managed on behalf of the government.
According to a statement released, “out of the total investible reserves, 60% was managed in house, most of which are held in over night and short term deposits with the foreign counterparty commercial banks while the remaining 40% is outsourced to external fund managers.” In 2007, the bank experienced a net in-flow of foreign exchange which has led to a further built up in foreign reserves which increased from USD 99.88 million in December ending 2006 to USD 114.8 million at the end of 2007, posting total reserve at 8-10 months of import cover against a minimum floor of 4 months set by the bank.” (Source: Vanuatu Daily Post, 8th July 2008) As of June 30th this year, over Vt1 billion of the VT6,700,380,000 (or US$65,690,000) Millennium Challenge Account (MCA) money has been used up.
Acting Director of MCA Vanuatu, Allen Faerua said that the remaining balance would be used to pay out contractors.

The projects announced in April 2006 were designed to “reduce poverty and increase rural income”.
A breakdown analysis of the remaining balance figure would be as follows: VT5 billion allocated towards civil works, over VT671 million to strengthen institutions, over VT171 million assigned towards Program management, over VT147 million towards monitoring and evaluation, over VT184 million for the fiscal and procurement agent and over VT35 million set aside for auditing purposes expected to be carried out every three months.
The largest figure allocated to civil works will be used to fund the 92km Efate Ring Road and tar sealing of the 31km Chapius to Matevulu road; and further upgrading work on the road from the Matevulu to Khole.

Downer EDI Works is the company responsible for the road work having had 130 years of experience.

The projects are expected to bring employment to over 200 people and income is anticipated to be distributed to the rural areas as raw materials are derived locally and not imported.
(Source: Vanuatu Daily Post, 10th July 2008) A hand-over ceremony took place between the NBV Board Chairman, Mr. John Aruhuri and Minister of Finance, Honorable Willie Jimmy to mark the hand-over of VT20 million government dividend paid by NBV to the government.

The handing over ceremony coincided with the release of the Bank’s 2007 Annual Report with copies for the government presented to the Minister.
According to the NBV Board Chairman, Mr. Aruhuri, the dividend reflects the continued growth and success of the Bank.

“Since CRP, the Bank has gone from strength to strength, continually increasing business, customer satisfaction and profit.” Highlights of the annual report include upgrades and renovations the Bank’s branches throughout the country and the possibility of opening new branches on Erromango and Santo.
“The bank believes the introduction of new services and its business expansion is indicative of its commitment to improving and expanding banking options for our customers,” managing director Bob Hughes said.

In five short years, the National Bank has more than doubled its profits from 35 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 4.

5.

6.

VT51.2 million in 2003 to 119.0 million in 2007. Business has grown significantly as well, with customer deposits increasing from 3.6 billion to 7.2 billion in 2007.
NBV’s loan portfolio has also more than doubled to 4.6 billion in 2007.
Mr. Hughes also added, “We look forward to continued growth and development in 2008 and expanding our services with our soon-to-be launched “Smart Card” technology and hopefully a few more branches as well.” (Source: Vanuatu Daily Post 2nd August 2008) Australia has recently announced in Canberra on August 17th, it’s approved three- year pilot scheme for seasonal workers from the Pacific to work in the fruit picking and vegetable harvesting industry in Australia.
As confirmed by the Australian High Commissioner in Port Vila, John Pilbeam, the scheme will begin in Vanuatu as soon as Australia has established recruitment arrangements which includes introducing relevant system to select and screen the most suitable applicants as well as in the participant countries.

Prior to this, no visa applications for the scheme will be considered or processed.
An initial total of 2,500 workers will be recruited from Vanuatu, Papua New Guinea, Tonga and Kiribati to participate in this pilot scheme.

Under this pilot scheme, these 2500 visas will be available over the next three years to allow workers from the four island countries to work in Australia for up to seven months a year.
(Source: Vanuatu Daily Post, 20th August 2008) Air Vanuatu is getting ready to launch a second weekly direct non-stop service from Melbourne, as traveler numbers from Australia continue to grow.

Speaking to e- Travel Blackboard at Tok Tok Vanuatu, Ted Drew, Air Vanuatu GM Sales and Marketing adds that the national carrier is also waiting to receive its first ATR72 in mid 2009, which is able to access Honiara, Nadi and other trunk domestic locations such as Santo and Tanna.
“This will give us a 56% more capacity than we have now,” adds Mr. Dew.

Air Vanuatu’s second Melbourne direct service will take place before, and while schedules are yet to be released.

“The second Melbourne Service will happen by December, says Mr. Drew.

“The new Melbourne service will come in due to demand…the figures have been good coming out from Melbourne.” Growth has been strong for Air Vanuatu, with a 10% jump in Australian travelers despite the global economic downturn.
“People will still travel…we are seeing some people book closer to their departure, but they’ll still travel,” said Mr. Drew.

Australia makes up some 60% of Air Vanuatu’s passenger numbers.

(Source: E-travel Blackboard, Vanuatu Daily Post, 30th August, 2008) The Reserve Bank of Vanuatu’s Monetary Policy Committee increased the rediscount rate to 6.25 per cent at their meeting on the 5th September 2008.

This became effective from Monday 8th September.


The increase in the rediscount rate was to curtail inflationary pressures as the rate of inflation remains at the upper end of the Bank’s comfort zone, registering 3.9 per cent for the second quarter of 2008 as a result of pressures coming from global energy, food and commodities market.

Private sector credit has also experienced strong growth during the first half of the year inline with the current economic situation.
Against that background, the committee judged that an increase of 0.25 percentage points to 6.25 per cent was necessary to help control the strong inflationary pressures.

(RBV Press Release, 5th September 2008) 20th August 2008 30th August 2008 8th September 2008 36 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 2008 BUSINESS EXPECTATION SURVEY Introduction The Statistics Unit of the Reserve Bank of Vanuatu carried out it’s Annual Business Expectations Survey during the middle of 2008.
All major business houses in Port Vila and Santo were approached.

The aim of this opinion based survey is to collect the views and expectations of a sample of business houses, providing a first hand economic judgment of the country’s economy.

The purpose of the survey was to collect and understand business sentiment in relation to the country’s economic development.

Furthermore these sentiments may provide some hints about business activities in the immediate future.
As an opinion based survey the collection process was straight forward.

A minimum sample of five was hand picked from various sectors operating in the country.

As a result of this process a total of 125 companies were in the survey sample.

The survey instrument was a questionnaire which was distributed by hand or mail to respective recipients in the sample.
Summary of Results The general assessment of this survey indicated that overall business houses do not expect any significant change to come in the remainder of the year.

low utility However, capacity and increases in operating expenses towards the next 6 months of the year.

some businesses indicated General Business Conditions (GBCs) Trend Business houses gave mixed views towards GBCs in the June and September Quarters.
There were indications that business houses feel optimistic about the respondents predicting worsening conditions in the next six months.

future with fewer In the June Quarter 42% of the Business Houses (BHs) indicated favorable GBCs followed closely by 38% of respondents noting no changes in GBCs.

Meanwhile 18% indicated a decrease.

In the September Quarter 31% noted a decrease in GBCs an increase of 28% from the June Quarter.
37 General Business Conditions 08 s t n e d n o p s e R f o e g a t n e c r e P 60 50 40 30 20 10 0 Jun Qtr Sept Qtr Nx t 6 mnths Increase Nchange Dcrease The forecast for the next six months shows 54% of the BHs expecting no change in GBCs.

Business Situation Trend Likewise, Business situations have experienced no change with approximately 50% of participants selecting this option for the June and September Quarters.

This trend is expected to continue for the next six months.
This may indicate that the business situation continues to remain favorable, while other businesses may perceive slow growth during low peak periods.

Company Profit Trend Company Profit 08 s t n e d n o p s e R f o e g a t n e c r e P 50 40 30 20 10 0 Jun Qtr Sept Qtr Nx t 6 mnths Increase Nchange Dcrease Company profit is favorable however there are indications that this trend may not continue.
In the June Quarter 33% of business houses recorded increases in profit while 31% noted either no change or a decrease in profits.

This trend remained the same in the September Quarter with the only exception being that 43% predicted no change in profits.
The outlook QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Temporary Employments Trend Temporary Employment 08 s t n e d n o p s e R f o e g a t n e c r e P 70 60 50 40 30 20 10 0 Jun Qtr Sept Qtr Nx t 6 mnths Increase Nchange Dcrease Temporary employment showed no change across all three time periods.

Just over 50% of the companies surveyed indicated that they have not, and do not expect to change their level of temporary employees.
While previous business attributes may be experiencing mostly favourable responses, recruitment will continue to remain relatively constant.

Various new investment companies would focus on establishment commitment to investment before further undertaking new investments or new ventures in extending business operations.

However, small indications (about 10% or less) were in favour of temporary recruits.
Only a few business houses (less than 10%) have indicated that they have no interest in temporary workers.

Permanent Employment Trend Similarly, the same trend of no change over the three periods is displayed for permanent employment.

During all three periods, over 60% of respondents predicted no change in the level of permanent employment.
This may reflect that certain businesses including major hotels/ restaurants/ resorts are becoming confident in maintaining full-time employees in line with the positive outlook of the economy.

Only they had 20% of increased employment, and this was the same across all three periods.

A few companies (less than 12%) may have or expect a decline in permanent employees.
respondents indicated that for the next six months noted a slight increase in the number of companies (46%) predicting an increase in profits.

Several companies remain optimistic about the general perspective of profit gain through various sectors and more specifically commodity trading companies are seeing increases in operating receipts from higher commodity prices during the year.

This could reflect the seasonal patterns towards the holiday seasons.
However no change in profits still tops the predictions likely reflecting the impact of rise in operating costs.

General Investment and Confidence Trend Approximately 60% of the business houses surveyed indicated no change Investment climate and in confidence.

This trend is projected for the next 6 months.


This demonstrates that general investment and confidence are high with hopeful aspirations Investment Trend Your Investment 08 s t n e d n o p s e R f o e g a t n e c r e P 80 70 60 50 40 30 20 10 0 Jun Qtr Sept Qtr Nx t 6 mnths Increase Nchange Dcrease Not surprisingly, a similar trend is displayed in investment with above 60% of the business houses indicating no change in their investments.
However, there was a slight increase in respondents (35%) indicating an increase in their investment in the next six months.

For businesses respondents in the northern town, Luganville, this would be obvious since the direct Brisbane – Luganville flight per week was a promising for genuine new investors creating a lot of speculation in the real estate markets.

Generally, investors perceive confidence in growth while various new investments have indication of further development in existing projects.
Less than 10% have indicated that they expect a decrease in investments across all three periods.
38 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Wages Trend Operating Expenses Trend Wages 08 Operating Expenses 08 s t n e d n o p s e R f o e g a t n e c r e P 80 70 60 50 40 30 20 10 0 Jun Qtr Sept Qtr Nx t 6 mnths Increase Nchange Dcrease In line with the most business houses favoring not to change the number of temporary and permanent employment, approximately, 60% of the business houses have indicated or are expecting no change in wages.
Nevertheless above 30% of respondents indicated wage increases in both the June and September Quarter and about 28% of respondents are projecting an increase in the next six months.

This may be associated with the high growth in prices in the domestic economy.

Furthermore less than 5% have or are expecting wage decreases.

s t n e d n o p s e R f o e g a t n e c r e P 70 60 50 40 30 20 10 0 Jun Qtr Sept Qtr Nx t 6 mnths Increase Nchange Dcrease expenses.
Approximately 60% The trend in operating expenses shows that over 50% of the companies are experiencing increases in operating of respondents indicated that they expect an increase in operating expenses in the next six months.

This may reflect the increase in global prices of food and fuel impacting the cost of goods coming into Vanuatu in terms of transport and unit cost.

Above 30% of respondents indicated no change.


Operating Receipts Trend Average Selling Price Trend Operating Reciepts 08 Average Selling Price 08 s t n e d n o p s e R f o e g a t n e c r e P 50 40 30 20 10 0 Jun Qtr Sept Qtr Nx t 6 mnths Increase Nchange Dcrease Approximately 30% of the business respondents indicated increases or no change in operating receipts over the last two quarters.

A sudden increase is expected in the next six months.
This may reflect the seasonal patterns towards the holiday season where businesses may expect higher sales.

Moreover above 10% of respondents have noted decreases in operating receipts.

s t n e d n o p s e R f o e g a t n e c r e P 70 60 50 40 30 20 10 0 Jun Qtr Sept Qtr Nx t 6 mnths Increase Nchange Dcrease In the region, 50% of company respondents indicated no change in their average selling price.

This is expected to remain the same for the next six months.
However, around 30% of respondents indicated increased prices across the June and September quarters and the next six months.

No convincing indications that prices will decline were given.

This may be a result of inflation in average prices.

This will have direct impact on consumers.

.


39 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Export Prices Trend Export Prices 08 s t n e d n o p s e R f o e g a t n e c r e P 40 35 30 25 20 15 10 5 0 Utilization Rate Trend Utilization Rate 08 s t n e d n o p s e R f o e g a t n a c r e P 50 40 30 20 10 0 Jun Qtr Sept Qtr Nx t 6 mnths Jun Qtr Sept Qtr Nx t 6 mnths Increase Nchange Dcrease Increase Nchange Dcrease The question on export prices was applicable to only a few business houses.
30% of respondents indicated no change in export prices.

Between 5-10% have indicated increases in the June and September quarter.

Another 5-10% are also anticipating a rise in the next six months.
Import Prices Trend Import Prices 08 s t n e d n o p s e R f o e g a t n e c r e P 60 50 40 30 20 10 0 Jun Qtr Sept Qtr Nx t 6 mnths Increase Nchange Dcrease in indicating this period In the June Quarter, 57% of respondents experienced an increase in import prices reflecting the high commodity prices that businesses may pass on price increases to their customers.
However, the number of business houses predicting an increase in import prices declined to 20% in the September quarter and the same response rate was given for the next six months.

This reflects the expectation of import prices to ease off after the record high prices in the first half of the year.

The general trend for the rate of utilization was for participants to select ‘no change’ with over 40% choosing this in the June and September Quarters.
Respondents indicated that they expect more changes in the next six months as the level of respondents selecting no change fell below 40%.

This could reflect that certain businesses are not utilized to their full potential.

Furthermore, the next 6 months, the level of respondents expected reduction in their utilization rate increased slightly.

Inflation Trend Approximately 90% of the respondents projected an increase in the inflation rate.
The expectations on the mostly likely rate of increase in inflation is shown in the graph below.

Projected Inflation Rate 08 s t n e d n o p s e R f o e g a t n e c r e P 40 35 30 25 20 15 10 5 0 1-3% 3-5% 5-7% 7-10% 10%+ The graph shows that most respondents expected the rate of increase in inflation to lie between 3-5% and 5-7% with 36.2% of respondents choosing both options.

The increase in unit price of food and fuel are amongst the factors contributing to inflation.
40 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 Economic Growth Trend Economic Growth 08 s t n e d n o p s e R f o e g a t n e c r e P 70 60 50 40 30 20 10 0 Projected Economic Growth Rate 08 s t n e d n p s e R f o e g t a n e c r e P 40 30 20 10 0 1-3% 3-5% 7-10% 10%+ 5-7% Rate Increase Nchange Dcrease Above 60% of the companies have indicated that they expect an increase in the level of economic growth for 2008.
Less than 20% of respondents opted for a ‘no change’ while less than 10% think the economic growth will decline.

Approximately 30% of business respondents indicated that they expect the level of economic growth to increase by 3-5%.
An additional concern is with a higher portion of respondents surveyed predicted no change in wage level, although the introduction of the sudden increase in minimum wage could have a tremendous impact on the employment sector adding to operating costs, obviously may pass on to consumers in time.

Inflation is still expected to remain high, and therefore growth for 2009 is expected to be lower than in 2008.
41 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 1: ASSETS OF THE RESERVE BANK OF VANUATU (Millions of Vatu) End of Period Foreign Sector Commercial Banks Public Sector Other Assets Total Assets Foreign SDR RTP Total Claims on Claims on Claims on Total Exchange Holdings with IMF Com/Banks Government NFPE 2003 2004 2005 2006 2007 4,364.60 6,018.20 6,988.50 10,572.20 11,363.40 2003 2004 2005 2006 2007 2008 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1,260.90
1,526.30 1,565.10 1,469.60 1,418.00 1,260.90 1,235.10 1,233.50 1,184.50 1,182.60 1,196.50 1,194.20 1,224.70 1,242.60 1,240.00 1,193.70 1,272.70 802.80 733.20 731.40 - - - - - 269.40 271.30 - - - - - - - - - - - - - - - - - - - - - 358.20
QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 2: LIABILITIES OF THE RESERVE BANK OF VANUATU (Millions of Vatu) End of Period 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2003 2004 2005 2006 2007 2008 Reserve Money Com/Bank's Vault Cash Currency outside Bank's Com/Bank's Deposits with RBV Total Foreign Government Contribution Liabilities Deposits, of which to RTP with IMF Deposits of NFPE RBV Notes Other Liabilities Total Liabilities 11,031.90
687.60
QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 3: ASSETS OF COMMERCIAL BANKS End of Period Vault Cash Reserves Deposits with RBV RBV Notes Total Foreign Assets 1/ Domestic Credit Claims on Government Municipalities Claims on Claims on NFPE (Millions of Vatu) Other Assets
 Total Assets Total Claims 1,528.30
Claims on Private Sector - 2.30 2.20 5.40 - (1.70) Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 2,783.90 2,758.50 2,695.00 2,720.20 296.80 297.80 347.10 99.10 26,935.60 26,294.90 27,257.90 27,209.00 918.00 1,001.20 773.00 773.00 263.40 267.20 314.00 450.80
1,785.30
Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.

1/ Includes small amounts of claims on foreign monetary authorities in the form of foreign currency notes and coins.

r. Revised.
44 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 4: LIABILITIES OF COMMERCIAL BANKS Demand Deposits Savings Deposits Time Deposits End of Period Local Currency Foreign Currency Total Local Currency Foreign Currency Total Local Currency Foreign Currency Total (Millions of Vatu) Foreign Government Deposits Liabilities Other Liabilities Total Liabilities 5,062.00
22,972.10
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.

2/ Government deposits in Vatu and Foreign currency.

r. Revised.
QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 5: MONETARY SURVEY: A CONSOLIDATED STATEMENTS OF ACCOUNTS OF THE MONETARY INSTITUTIONS (Millions of Vatu) NET FOREIGN ASSETS(NFA) End of Period 'Monetary Authorities Foreign Liabilities Foreign Assets Net 'Commercial Banks Foreign Assets Foreign Liabilities Net 2002 2003 2004 2005 2006 2007 4,854.40 4,953.50 6,614.50 7,595.60 11,191.90 11,939.50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 11,464.60
Total NFA 24,647.40 24,679.10 27,575.10 29,488.20 32,592.70 37,497.00 23,965.10 22,501.60 24,063.30 24,679.10 26,768.30 27,959.40 27,890.50 27,575.10 28,508.70 29,651.90 29,756.00 29,488.20 29,908.80 32,791.60 31,537.70 32,592.70 32,028.90 32,968.20 34,645.50 37,497.00 37,989.50 40,036.00 38,068.50 Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.

2/ Including claims on Vanuatu Commodities Marketing Board (VCMB).

3/ Including claims on RBV staff 46 'Claims on DOMESTIC CREDIT Claims on 'Claims on Claims on Municip- Private alities Sector 3/ Govt.
(Net) NFPE 2/ 1,319.60 1,128.60 954.50 (162.50) (697.20) (1,110.30) 1,396.60 1,339.90 1,428.90 1,128.60 1,245.10 1,272.70 1,174.00 954.50 551.00 167.30 (43.40) (162.50) (510.40) (670.60) (520.60) (697.20) (815.70) (859.20) (890.50) (1,110.30) (1,571.20) (1,914.90) (2,369.60) - 2.30 2.20 5.40 - (1.70) 5.50 6.20 16.40 11.10 10.40 13.40 12.30 13.20 13.30 13.10 13.40 12.30 15.00 16.70 13.10 15.50 17.60 Total Domestic Credit 15,092.80 15,888.10 17,093.50 18,546.50 19,853.80 21,944.40 15,223.90 15,621.40 15,621.30 15,888.10 16,106.80 16,570.00 16,800.70 17,093.50 17,171.80 17,547.10 18,092.80 18,546.50 19,661.20 19,574.40 19,913.70 19,853.80 20,472.80 21,193.90 21,344.40 21,944.40 24,224.60 26,597.10 29,016.00 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 5: MONETARY SURVEY: A CONSOLIDATED STATEMENT OF ACCOUNTS OF THE MONETARY INSTITUTIONS....continued... (Millions of Vatu) 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) Total Total Liquidity OTHER ITEMS (Net) 2002 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 16,153.30
Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.

2/ Including claims on Vanuatu Commodities Marketing Board (VCMB).
3/ Including claims on RBV staff 47 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 6: DOMESTIC MONEY SUPPLY AND COMPONENTS (Millions of Vatu) End of Period 2003 2004 2005 2006 2007 2003 Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 Notes Coins Total (1) (2) (1+2) (3) 2,559.20 2,937.20 3,378.30 3,901.40 4,688.60 2,109.60 2,209.60 2,314.20 2,559.20 2,307.60 2,438.00 2,598.70 2,937.20 2,617.70 2,686.60 2,897.50 3,378.30 2,878.20 3,147.40 3,364.90 3,901.40 3,440.90 3,719.90 3,928.00 4,688.60 4,255.40 4,632.30 4,632.30 Cash in hand with Banks ( 4 ) Currency with Public in Vatu (3-4) ( 5 ) Demand Deposits of Residents in foreign currency (DdF) 2/ ( 7 ) M1 (Narrow Measure) (5+6+7) ( 8 ) Savings & Time Deposits of Residents in Vatu (T dV) ( 9 ) Savings & Time Deposits of Residents in foreign currency (TdF) ( 10 ) M2 (Broad Measure) (9+10) ( 11 ) 450.80 447.10 687.60 745.40 1,118.70 263.40 267.20 314.00 450.80 323.70 296.10 380.90 447.10 409.00 344.70 319.80 687.60 374.00 387.80 415.10 745.40 2,108.40 2,490.10 2,690.70 3,156.00
25,414.30
22,553.00 24,566.40 25,556.30 25,623.60 25,414.30 25,934.90 26,211.10 28,063.40 28,522.40 28,749.50 30,158.50 28,916.90 29,787.80 30,472.10 31,292.20 32,329.10 33,880.90 35,498.80 38,465.20 38,559.52 Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.

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.
48 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 7: DISTRIBUTION OF VATU AND FOREIGN CURRENCY DEPOSITS OF RESIDENTS BY CATEGORIES 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/ End of Period 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Note:
14,822.44 23,087.90 25,741.43 26,723.21 Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.

1/ Excludes deposits of the Vanuatu Government.

2/ Government deposits in Vatu and Foreign currencies.
16,566.10
QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 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 usive of 7 days and up to 1 month 1 to 2 Months Maturity Period 2 to 3 Months 3 to 6 Months 6 to 12 Months Over one Year Total 2/ 2003
 2004 2005 2006 2007 2003 Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 3,342.41
Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.
50 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 9: COMMERCIAL BANKS SECTORAL DISTRIBUTION OF LOANS & ADVANCES IN VATU AND FOREIGN CURRENCY (Millions of Vatu) End of Period 2003 2004 2005 2006 2007 2003 Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 Agriculture Fisheries Mining & Manufact- Tourism Quarrying turing Entertain- ment & Catering Transport Public Utilities Construc- tion (a) Govern- (b) Public ment Corporation - 11.20 - - - - - - 7.50 15.20 11.20 5.70 3.40 - - - - 42.50 46.40 46.00 46.00 - 1,518.20
Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.

1/ Non-reporting banks includes Trust companies, Insurances etc.
51 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 9: COMMERCIAL BANKS SECTORAL DISTRIBUTION OF LOANS & ADVANCES IN VATU AND FOREIGN CURRENCY …..continued… (Millions of Vatu) End of Period Financial Institutions Professional & Other Services Housing & Land Purchaces Distribution Personal: Others Miscella- neous TOTAL Of which: Vatu Private Government Claims on non-repor- shares & Bonds ing banks Bonds GRAND TOTAL 2003 2004 2005 2006 2007 2003 Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 14,580.00
Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.

1/ Non-reporting banks includes Trust companies, Insurances etc.
52 - - - - - - - - - - - - - - - - - - - - - - - - 773.00 813.00 838.00 708.00 488.00 1,164.00 1,001.20 773.00 773.00 863.00 863.00 813.00 813.00 773.00 838.00 838.00 838.00 838.00 708.00 708.00 708.00 588.00 488.00 488.00 488.00 567.90 473.60 483.12 - - - - - - - - - - - - - - - - - - - - - - - 15,353.00 16,860.30 19,515.40 21,356.70 23,854.10 14,194.70 14,840.00 14,790.22 15,353.00 15,547.10 16,020.20 16,339.40 16,860.30 17,337.20 18,175.40 18,892.30 19,515.40 20,977.20 20,973.50 21,182.50 21,356.70 21,960.40 22,683.00 22,924.00 23,854.10 26,711.56 29,458.50 32,277.83 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 10: DISTRIBUTION OF VATU ADVANCES BY INTEREST RATES AS AT END OF MARCH 2008 (Millions of Vatu) RATE OF INTEREST ( % ) Agriculture & Fisheries Mininig & Manufacturing Other Productive Sectors Distribution, Trade & Housing & Land land Purchase for 0ther Sectors Owner occupation Other Personal Total Below At 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 107.00 11.90 18.10 - - 46.10 19.00 - 0.30 0.90 21.40 - 4.50 1.10 22.40 - 2.80 - 4.50 0.20 - - - 260.20 0.88 Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.
1,026.50 2.70 63.00 44.50 2.20 135.80 30.90 - 38.50 5.00 2.90 6.40 - - 8.10 39.10 - 0.70 4.00 51.70 2.10 - 9.60 1,473.70 4.99 1,653.00 254.70 223.40 216.40 384.60 41.60 63.60 188.30 116.70 136.20 209.10 313.40 346.00 60.00 971.90 1.60 13.40 9.00 20.50 12.90 5.80 6.20 52.20 5,300.50 17.95 At Above 2,527.60 293.10 197.80 173.70 447.00 333.10 124.60 156.00 169.30 49.70 1,418.50 46.00 28.60 47.70 85.20 12.80 5.30 0.08 3.00 - 5.60 0.50 76.70 6,201.88 21.00 1,292.50 1,948.00 395.60 3,279.00 377.00 454.70 157.70 488.20 345.70 76.30 531.50 42.80 12.40 31.60 344.60 3.80 0.40 7.20 27.60 13.60 - 7.60 13.10 9,850.90 33.35 2,399.70 233.80 51.10 326.50 43.80 170.40 50.00 64.00 258.20 227.60 1,539.00 300.80 26.30 127.50 241.50 17.00 1.80 24.40 92.80 - QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 11: SELECTED INTEREST RATES FOR LOCAL COMMERCIAL BANKS 1/ End Period 2002 2003 2004 2005 2006 2007 2003 Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 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 0.50-2.00 1.00-5.00 0.50-2.00 1.50-6.00 0.50-2.00 1.50-6.00 0.50-2.00 2.00-6.50 0.50-2.00 1.75-4.20 0.50-2.00 1.25-3.50 1.00-5.75 1.50-6.00 1.50-6.00 2.00-7.00 1.75-4.50 1.25-4.50 1.75-6.25 1.75-6.00 1.75-4.75 2.25-7.00 2.75-4.75 2.25-5.50 0.50-2.00 1.00-5.00 0.50-2.00 1.00-5.00 0.50-2.00 1.00-6.00 0.50-2.00 1.00-6.00 1.00-5.75 1.00-5.50 1.50-6.00 1.50-6.00 1.75-6.50 1.75-6.00 1.75-6.00 1.75-4.75 0.50-2.00 1.50-6.00 0.50-2.00 1.50-6.00 0.50-2.00 1.50-6.00 0.50-2.00 2.00-5.00 1.50-6.00 1.50-7.00 1.50-7.00 2.00-6.00 2.75-7.00 2.25-7.25 2.25-7.25 2.25-7.25 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 1.25-5.75 1.25-6.95 1.25-7.50 2.25-5.75 2.25-7.00 2.25-9.09 4.13 5.02 4.85 4.60 4.29 - - - - - - - - r 2.14 2.12 2.25 2.28
2.35 2.41 2.43 2.40 2.24 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 3.13-4.09 3.55-4.425 3.55-4.425 3.50-4.55 3.50-5.45 3.50-5.50 3.20-4.10 3.20-4.10 3.20-4.08 3.55-4.425 3.55-4.40 3.55-4.43 3.55-4.425 3.55-4.55 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 5.90-12.50 10.00-16.00 9.75-25.00 5.90-18.50 9.75-25.00 6.50-16.00 6.50-16.00 5.90-18.50 9.75-25.00 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 10.00-16.00 9.75-25.00 9.75-25.00 8.00-16.00 9.75-25.00 8.00-16.00 9.75-25.00 6.50-16.00 5.90-12.50 5.90-12.50 5.90-12.50 5.90-18.50 10.00-16.00 12.00-25.00 8.95-14.75 10.00-16.00 12.00-25.00 8.95-14.75 8.50-16.00 12.00-25.00 8.95-14.75 8.50-16.00 12.00-25.00 5.90-14.75 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 11.58 11.73 11.73 11.37 11.30 10.31 11.44 11.22 11.75 11.73 11.60 11.55 10.84 11.59 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 6.90-8.95 4.50-21.50 7.50-18.50 4.50-12.10 4.50-21.50 6.99-18.50
7.50-18.50 4.50-12.10 4.50-21.50 6.99- Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.

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 data covers 4 commercial banks 2/ Interest rates relating to vatu advances ranging from the minimum 7.00 percent also reflect rates offered to their staff.
r: Revised 54 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 12: DENOMINATIONS OF CURRENCY ON ISSUE End of Period 2003 2004 2005 2006 2007 2003 Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 VT100 VT200 Notes VT500 ( Millions of Vatu ) Coins Total Notes VT1,000 VT5,000 Total & Coins 1,971.38
QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 13: NET OFFICIAL RESERVES 1.
Net Official Reserves End of Period Foreign Special Reserve Total Exchange of RBV Drawing Rights Position in IMF Holdings (1) (2) (3) (4) (1+2+3) Foreign Liabilities (5) Net Position (6) (4-5) 2002 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2003 2004 2005 2006 2007 2008 Q1 Q2 Q3 11,622.70
4,737.60 4,737.60 7,350.60 10,963.80 11,622.70 4,424.20 4,505.50 4,577.50 4,737.60 4,661.40 5,048.90 5,508.00 6,412.80 6,600.50 6,868.90 7,094.80 7,350.60 7,745.70 9,149.60 9,988.00 10,963.80 10,720.80 10,827.80 10,890.80 11,622.70 11,469.10 11,464.70 11,688.30 Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.

(Millions of Vatu) 2.
Net Foreign Assets of Commercial Banks Foreign Liabilities (8) Foreign Assets (7) Net Position (9) (7-8) QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 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 Notes Outstanding (Million Vatu) 1/ 2-Jul-08 9-Jul-08 16-Jul-08 23-Jul-08 30-Jul-08 6-Aug-08 13-Aug-08 20-Aug-08 27-Aug-08 3-Sep-08 10-Sep-08 17-Sep-08 24-Sep-08 07 days 14 days 28 days Total 07 days 14 days 28 days Total 07 days 14 days 28 days 63 days Total 07 days 14 days 28 days Total 07 days 14 days 28
 days 63 days Total 07 days 14 days 28 days 63 days 91 days Total 07 days 14 days 28 days 63 days 91 days Total 07 days 14 days 28 days 63 days 91 days Total 07 days 14 days 28 days 63 days 91 days Total 07 days 14 days 28 days 63 days 91 days Total 07 days 14 days 28 days 63 days 91 days Total 07 days 14 days Total 07 days 14 days Total 9-Jul-08 16-Jul-08 30-Jul-08 16-Jul-08 23-Jul-08 6-Aug-08 7-Jan-00 14-Jan-00 28-Jan-00 3-Mar-00 7-Jan-00 14-Jan-00 28-Jan-00 6-Aug-08 13-Aug-08 27-Aug-08 1-Oct-08 13-Aug-08
 20-Aug-08 3-Sep-08 8-Oct-08 5-Nov-08 20-Aug-08 27-Aug-08 10-Sep-08 15-Oct-08 12-Nov-08 27-Aug-08 3-Sep-08 17-Sep-08 22-Oct-08 19-Nov-08 3-Sep-08 10-Sep-08 24-Sep-08 29-Oct-08 26-Nov-08 7-Jan-00 17-Sep-08 1-Oct-08 5-Nov-08 3-Dec-08 17-Sep-08 24-Sep-08 8-Oct-08 12-Nov-08 10-Dec-08 24-Sep-08 1-Oct-08 1-Oct-08 8-Oct-08 2.24-2.40 2.30 2.30 2.24-2.75 2.30-2.85 2.30-2.95 2.20-2.24 2.20-2.30 2.25 5.19-5.22 2.20-2.24 2.25-2.30 2.28-5.20 2.30 2.40 2.50 5.15- QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 15: COMMERCIAL BANK'S LIQUIDITY (Millions of Vatu) RBV Notes Total (5) 99.10 1,068.60 585.40 1,809.00 1,590.90 296.80 297.80 347.10 99.10 223.20 372.70 571.20 1,068.60 820.50 1,019.50 546.20 585.40 704.40 982.70 1,268.50 1,809.00 1,112.10
 1,141.00 1,741.40 1,590.90 1,379.40 1,147.40 239.18 (3+4+5) (6) 2,819.30 3,873.60 3,832.10 6,574.80 6,821.30 3,080.70 3,056.30 3,042.10 2,819.30 4,255.00 3,133.10 3,501.80 3,873.60 3,906.00 3,763.50 3,627.90 3,832.10 3,894.40 5,011.90 5,711.60 6,574.80 6,560.00 6,451.30 6,428.10 6,792.10 6,640.00 5,893.80 5,369.74 End of Period 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2003 2004 2005 2006 2007 2008 Vault Cash Liquid Assets Deposits with RBV (Excess Reserves) (1)
 (2) Total (1+2) (3) Statutory Reserve Deposits (SRD) (4) Note: Data accomodates 4 Commercial Banks.
BRED Bank commenced operations in March 2008.
58 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 16: DOMESTIC BANKS CONSOLIDATED CAPITAL - 1/ (Thousands of Vatu) Less goodwill etc TOTAL TIER 1 CAPITAL TIER 2 General Provisions for doubtful depts Eligible TOTAL TIER 2 CAPITAL TOTAL TIER 1 & TIER 2 CAPITAL BASE 3,831,702 4,947,961 4,106,145 5,270,480 5,444,542 3,228,067 3,347,823 3,595,577 3,831,702 379,431 852,000 259,000 2,733,411 2,726,499 2,762,418 3,784,961 494,000 735,000 1,045,000 303,000 4,090,411 4,326,499 4,671,418 4,947,961 End of Period Paid-Up Capital 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 TIER 1 Disclosed reserves & retained earnings 2/ 2,969,702 4,087,961 3,243,145 4,410,480 4,588,542 1,946,972 2,511,823 1,877,577 2,710,702 3,676,883 3,502,858 3,132,277 3,243,145 3,618,357 4,073,333 4,118,470 4,410,480 3,851,245 4,047,226 4,056,224 4,588,542 2008 Q1- 2/ Q2 Q3 2,523,000 2,522,000 2,527,000 4,825,410 5,120,375 5,495,537 1/ Excluding branches of foreign banks 2/ Revised 3/ Impared assets 176,700
4,834,855
QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 16: DOMESTIC BANKS CONSOLIDATED CAPITAL - 1/….continued (Thousands of Vatu) Total risk weighted assets End of Period ASSETS QUALITY 1 Asset Quality Substan- dard Standard -2 /Qtr 2 - 2006 Doubtful (D) Loss (L) Total lending loss Total risk weighted assets 1/ Restructured Non-accrual 2 Provisioning items items (D+L) 3/ Provisions (specific) Provisions (General) Security 120,510
14,124,786
211,808
25,412,328 26,051,753 88,696 145,940 211,808 139,513 3,543,385 3,499,108 3,225,294 3,015,726 896,342 1,099,481 1,055,660 840,682 63,325 7,669 47,623 31,403 13,398,205 14,501,759 14,608,394 14,743,809 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 Q1- 2/ Q2 Q3 20,940,394 23,154,647 24,723,915 22,926,178 25,741,374 28,294,410 763,817 783,344 699,561 2,780,767 2,795,087 2,930,522 223,354 230,019 354,598 26,694,116 29,549,824 32,279,091 28,562,394 31,670,647 33,136,915 163,230 169,127 189,039 3,004,121 3,025,106
 3,285,120 792,388 759,326 1,343,899 66,881 97,032 100,765 15,464,435 16,055,177 20,773,117 1/ Excluding branches of foreign banks 2/ Revised 3/ Impared assets 60 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 17: INTERNATIONAL BANKS - BALANCE SHEET (A) TOTAL ASSETS 1 CASH ITEMS End of Period Cash Balances & CDs issued by banks Gold and Silver Bullion Cash items in process of collection TOTAL 2 MARKET SECURITIES (up to 1 yr.
Original Maturity) Zone A: Zone A: Bank Other public securities sector Other securities (Thousands of Vatu) 3 LOANS & ADVANCES TOTAL Public Sector Banks TOTAL Other loans & advances 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 614.00 5,236.00 737.00 802.00 440.00 5,912.00 5,338.00 5,967.00 614.00 9,639.00 4,705.00 5,339.00 5,236.00 2,816.00 1,549.00 454.00 737.00 874.00 982.00 1,032.00 802.00 Q1 728.00 Q2 35,488.00 926.00 Q3 440.00 Q4 52,103.00 46,291.00 30,312.00 39,606.00 76,813.00 65,058.00 79,479.00 69,602.00 52,103.00 49,652.00 49,438.00 51,128.00 46,291.00 40,388.00 32,788.00 29,857.00 30,312.00 38,888.00 31,898.00 31,481.00 39,606.00 56,513.00 64,434.00 58,889.00 76,813.00 Q1 Q2 Q3 6,378.00
- - - - - 726.00 613.00 664.00
12.00 12.00 12.00 - - - - - 726.00 613.00 664.00 711.00 454.00 462.00 517.00 518.00 - 11.00 12.00 12.00 12.00 12.00 - - - - - Total of 1 CASH ITEMS (annually) for 2003, 2004, 2005 & 2006 are inconsistent with the formula 61 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 17: INTERNATIONAL BANKS - BALANCE SHEETS (A) ….. continued… TOTAL ASSETS (Thousands of Vatu) End of Period (Over 1 yr Original Maturity for dept instrument) 4 INVESTMENTS 5 OTHER ASSETS 6 TOTAL ASSETS Zone A: Public Sector & Bank Securities 1,071.00 Affiliated Institutions Other Securities Other Equities TOTAL Accured interest receivable TOTAL Other assets Equipement & other fixed assets(net of accumulated depreciation) 4,404.00 1,780.00 4,019.00 501,796.00 502,084.00 4,656.00 7,141.00 - - 2,807.00 44.00 44.00 44.00 44.00 44.00 10,175.00 8,965.00 4,063.00 501,840.00 504,935.00 69.00 56.00 62.00 26.00 25.00 141.00 26.00 68.00 57.00 35.00 1,700.00 19.00 19.00 72.00
- 1,547.00 501,732.00 501,729.00 501,796.00 2,527.00 2,650.00 2,762.00 - 501,916.00 504,519.00 502,143.00 502,084.00 2,813.00 - 3,057.00
 2,807.00 502,212.00 501,297.00 501,195.00 2,716.00 2,675.00 2,638.00 44.00 44.00 44.00 44.00 44.00 44.00 44.00 44.00 44.00 44.00 44.00 44.00 44.00 44.00 44.00 44.00 44.00 - - - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2003 2004 2005 2006 2007 2008 Total of 1 CASH ITEMS (annually) for 2003, 2004, 2005 & 2006 are inconsistent with the formula 62
 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 18: INTERNATIONAL BANKS - BALANCE SHEETS (B) TOTAL LIABILITIES (Thousands of Vatu) 1 DEPOSITS 2 TERM DEPT AND OTHER BORROWINGS End of Period Banks Corpora- tions Trusts Individuals Negotiable certificates of deposits Other TOTAL TOTAL Unsecured subordinated dept(over 5 yrs original term maturity) Other Other notes & borrowings (including bonds loans, overdrafts, commercial papers) 2003 2004 2005 2006 2007 52,813 136,456 89,849 17,948 98,298 10,102 420,790 0 389,006
 Q1 603,646 408,906 82,617 203,971 Q2 Q3 151,196 184,079 52,813 136,456 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 18: INTERNATIONAL BANKS BALANCE SHEET – BALANCE SHEET (B) …..continued … TOTAL LIABILITIES
 (Thousands of Vatu) 8 TOTAL 9 TOTAL LIABILITIES & SHARE- HOLDERS EQUITY 7 SHAREHOLDERS EQUITY Issued & fully paid up common stock (at par or norminal value) Additional Unappro- Current year's priated paid up net retained capital in income/ earnings excess of par or (loss) nominal value 3,045
-616 1,375 567 -30 3,145 2,684 5,337 1,623 757 968 1,627 468 166 -741 - - End of Period 3 ACCRUED LIABILITIES TOTAL Accrued interest payable Other accured expenses 4 OTHER LIABILI- TIES 5 LOSS RESERVES TOTAL General loan loss reserves Other loss reserves 6 TOTAL LIABILI- TIES 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1,559
546,920
QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 19: DOMESTIC BANKING INDUSTRY FOREIGN EXCHANGE TURNOVER AGAINST VATU CURRENCY FOREIGN EXCHANGE TURNOVER AGAINST VATU CURRENCY (VT '000') End of OUTRIGHT SPOT Period Resident Dealers Overseas Banks Resident Customers Non-resident Customers 2006 2007 2008 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FOREIGN EXCHANGE TURNOVER AGAINST USD CURRENCY (VT '000') Internal Transac- tions 58,979 550,359 14,585 257,439 205,971 Total 1,212,189 2,112,202 1,256,984 1,080,648 1,228,323 1,443,359 3,957,309 3,182,318 2,749,702 5,091,923 7,273,615 OUTRIGHT FORWARD Resident Dealers Resident Customers Overseas Banks Non-resident Customers Total SWAPS Internal Transactions Total 19950 428840 542495 5,152 88,839 467,183 505,571 470,878 536,727 705,300 417,577 30,575 672,191 786,846 568,933 467,183 525,521 470,878 536,727 705,300 846,417 542,495 30,575 766,182 786,846 568,933 - - - - - - - - - - - Total FX turnover against Vatu 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 End of OUTRIGHT SPOT Resident Period Customers Overseas Banks Resident Dealers Total Non-resident Customers Internal Transac- tions OUTRIGHT FORWARD Resident Dealers Resident Customers Overseas Banks Non-resident Customers 2006 2007 2008 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 192
Total Total Internal Transactions 2,150 402,922 - 333,500 - - - - 256,944 14,530 - - - - - - - - - - - - Total FX turnover against USD TOTAL FX TURNOVER AGAINST VATU & USD 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 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 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 20: DOMESTIC BANKING INDUSTRY CORE SET OF FINANCIAL SOUNDNESS INDICATORS (%) DEPOSIT - TAKING INSTRUMENTS End of Period 2003 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2003 2004 2005 2006 2007 2008 Q1 - r/ Q2 Q3 1 CAPITAL ADEQUACY 2 ASSET QUALITY Regulatory Capital to risk - Weighted assets 1/ Regulatory Tier 1 Capital to risk - Weighted assets 1/ Nonperform- loans net of provisions to capital r/ Nonperform- loans to total gross loans 3 EARNINGS & PROFITABILITY Return on Return on assets (ROA) equity (ROE) Interest margin to gross income Noninterest expenses to gross income 28.40
32.50 34.90 30.60 28.50 25.60 25.60 29.00 28.40 31.10 32.30 28.40 28.40 26.90 28.60 35.10 33.00 32.50 1/ - Excluding branches of foreign banks r/ - Revised 69.90
LIQUIDITY Liquid assets to total assets 18.10 17.20 25.80 18.80 25.40 23.50 21.20 18.10 17.90 19.80 21.40 23.40 22.10 18.80 17.50 17.20 17.80 20.50 24.20 25.80 24.60 21.60 20.80 18.80 16.60 15.30 11.90 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 21: DOMESTIC BANKING INDUSTRY - PROFIT (VATU '000') PROFIT 1 INCOME Interest income Non-interest income End of Period 2 EXPENSES 3 PROFIT & LOSS STATEMENT Total Operating Income Interest Expense Operating Expenses (Excluding bad depts & provision charges Total Operating expenses Net Interest Income Operating Profit before tax, write-offs & provisions Provisions Bad Depts Written-off Net Operating Profit 2003 2005 2006 2007 673,526 951,810 1,044,965 1,130,417 2003 Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 692,256 692,122 676,088 673,526 734,640 703,740 705,328 772,775 769,060 824,346 877,408 951,810 917,459 1,118,806 1,072,416 1,044,965 1,039,365 1,171,178 1,089,604
 1,130,417 2008 Q1 Q2 Q3 1,162,696 1,234,970 1,289,150 r/ - revised 1,600,615
r/ 646,850.0 r/ 1,173,360.0 r / 1,260,532 681,533 1,292,433 674,717 578,999 617,716 636,186.0 r / 655,971 671,434 478,725.0 r / 531,107 515,411 33,197 7,142 22,635 25,029 24,485 29,574 29,838 33,197 26,767 21,087 33,944 29,409 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 4,410 (1,336) (7,488) (9,082) 13,196 38,846 12,579 4,410 7,529 5,080 1,336 5,887 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) 409,762 381,401 586,995 550,754 690,185 401,362 365,832 384,171 381,401 382,368 390,842 444,696 429,014 461,252 514,451 590,706 586,995 568,732 731,853 625,281 550,754 562,357 609,313 434,741 690,185 - 456130.0 r / 515,572 74,246 67 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 22: VANUATU GOVERNMENT FISCAL OPERATIONS (Millions of Vatu) TOTAL REVENUE AND GRANTS Domestic Revenue EXPENDITURE AND NET LENDING Lending Recurrent Expenditure minus Non-recurrent
 Development Expenditure transfer to Gov.
bodies Items 2002 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2003 2004 2005 2006 2007 2008 Tax Revenue Non Tax Revenue Source : Department of Finance Grants from Abroad 727.9 381.4 684.8 582.3 851.3 980.1 73.9 170.0 129.5 8.0 108.3 183.4 89.3 303.8 161.1 249.5 53.5 118.2 262.3 200.7 195.3 193.0 130.9 383.3 294.6 171.3 68.2 1,714.6 1,115.2 TOTAL 7,258.3 7,061.7 8,129.7 8,795.8 10,008.6 12,032.7 1,669.7 1,665.2 1,865.6 1,861.2 1,977.0 1,903.1 2,039.6 2,210.0 2,420.7 2,227.2 2,008.2 2,139.7 2,492.2 2,313.7 2,499.9 2,702.8 2,770.7 2,900.7 3,079.2 3,282.1 3,564.0 4,657.8 4,560.4 Repayments - - - - - - - - - - - - - - - - - - - - - - - - - - - - - DEFICIT / SURPLUS - 7,258.3 620.7 443.9 831.6 427.2 69.6 - - - - 170.1 148.8 147.1 154.7 207.8 30.9 26.7 178.5 589.7 487.1 38.0 207.2 - - 657.3 138.1 95.7 272.5 - - - - 381.1 223.5 123.7
 211.7 474.8 353.5 824.6 TOTAL - 7,682.4 7,685.8 7,964.2 9,581.4 11,963.2 1,839.8 1,814.0 2,012.7 2,015.9 1,769.2 1,872.2 2,012.9 2,031.5 1,831.0 1,740.1 2,046.2 2,346.9 1,834.9 2,175.6 2,595.6 2,975.3 2,389.6 3,124.2 2,955.5 3,493.9 3,089.2 4,304.3 3,735.8 458.3 - - - 335.8 - - - - - - - - - - - - - 70.0 60.8 150.0 55.0 - - - - - - 722.1 442.7 413.3 461.6 690.1 912.0 87.2 129.1 126.7 99.7 91.4 140.4 122.0 59.5 162.4 83.9 141.0 74.3 80.4 145.9 221.2 242.6 138.4 256.5 225.6 291.5 122.8 1,312.2 1,031.4 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 23: GOVERNMENT REVENUE CLASSIFIED BY MAJOR SOURCES TOTAL REVENUE AND GRANTS Total Recurrent Revenue Taxes on Use of Goods Turnover Business Tax Licenses Value Added Tax Tax Revenue Tax on International Trade Other taxes Total Other Total Import duties Export duties Total Property income Dividents Other (Millions of Vatu) Non Tax Revenue Admin.
fees & Charges Other Total Grants from abroad 0.6
692.3 806.0 845.5 1,047.6 834.0 965.7 1,008.1 0.6 0.1 - - 5.8 0.1 - - - - - - - - - - - 3.3 0.6 0.4 1.5 7.2 0.5 - 0.0 0.7 - 1,729.5
- Items 2002 2003 2004 2005 2006 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2003 2004 2005 2006 2007 2008 Source : Department of Finance 69 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 24: GOVERNMENT EXPENDITURE CLASSIFIED BY MAJOR CATERGORY Items 2002 2003 2004 2005 2006 Goods and Services Total o/w Wages& Salaries 3,929.1 4,072.2 4,053.8 4,222.1 5,168.5 5,834.3 5,683.3 5,580.9 5,942.9 7,021.5 2003 2004 2005 2006 2007 2008 Q1 Q2 Q3 Q4
 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Source : Department of Finance Recurrent Expenditure Interest payments Domestic External Total
 (Millions of Vatu) Subsidies and transfers Total o/w Provinces & Municipalities 202.7 206.8 197.1 200.5 190.1 1,004.0 1,118.1 1,163.1 883.3 939.9 Acquisition of fixed capital assets 79.5 85.9 159.3 327.4 256.2 Lending minus repayments - - - - - Total Recurrent Expenditures 7,236.5 7,239.7 7,272.5 7,502.6 8,555.5 Non-recurrent transfers to Gov.bodies 458.3 - - - 335.8 Total Development Expenditure - - - - - - - - - - - - - - - - - - - - - - 1,752.6 1,684.9 1,886.0 1,916.2 1,677.8 1,731.8 1,890.9 1,972.0 1,668.6 1,656.2 1,905.2 2,272.6 1,684.5 1,968.9 2,224.4 2,677.7 2,251.2 2,867.6 2,729.9 3,202.5 2,966.4 2,992.1 2,704.4 - - - - - - - - -
 - - - 70.0 60.8 150.0 55.0 - - - - - - - 87.2 129.1 126.7 99.7 91.4 140.4 122.0 59.5 162.4 83.9 141.0 74.3 80.4 145.9 221.2 242.6 138.4 256.5 225.6 291.5 122.8 1,312.2 1,031.4 TOTAL EXPENDITURE 7,958.6 7,682.4 7,685.8 7,964.2 9,581.4 1,839.8 1,814.0 2,012.7 2,015.9 1,769.2 1,872.2 2,012.9 2,031.5 1,831.0 1,740.1 2,046.2 2,346.9 1,834.9 2,175.6 2,595.6 2,975.3 2,389.6 3,124.1 2,955.5 3,494.0 3,089.2 4,304.3 3,735.8 70 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 25: VANUATU GOVERNMENT OUTSTANDING BONDS
 (Thousands of Vatu) Period Ended Reserve Bank of Vanuatu Commercial (1).
Public Others Banks Corporation Total Outstanding BOND HOLDERS 1998 Q1 Q2 Q3 Q4 1999 Q1 Q2 Q3 Q4 2000 Q1 Q2 Q3 Q4 2001 Q1 Q2 Q3 Q4 2002 Q1 Q2 Q3 Q4 2003 Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 2,500
2,983,200
2,982,950 2,982,950 2,982,950 2,982,950 2,983,200 2,982,990 2,982,990 71 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 26: EXCHANGE RATES EXCHANGE RATES: VATU PER UNIT OF FOREIGN CURRENCIES 2006 2007 2008 Period (Yr/Mth) 2005 2006 2007 End of Period Rates Averages ECU / Euro Australian Dollar US Dollar Australian Dollar 83.23 83.47 85.97 US Dollar 95.54
99.76 97.53 98.650 99.86 97.41 94.43 95.48 95.54 95.68 94.48 95.70 100.78 104.41 NZ Dollar QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 27: BALANCE OF PAYMENTS SUMMARY (Millions of Vatu) Goods Credit Goods Debit Services Credit Current Account Services Debit Income Credit Income Debit Current Current trans.
cr.

Current trans dr. Account Period 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2003 2004 2005 2006 2007 2008 ** - Number of months cr.
Credit dr. Debit 3,249 4,264 4,166 4,166 2,240 627 745 838 1,039 927 1,023 1,164 1,150 1,012 927 1,118 1,109 847 1,118 1,034 1,167 364 695 1,096 85 607 876 1,695 (11,161) (12,624) (14,345) (15,583) (17,996) 13,463 13,660 15,182 16,116 18,959 (2,510) (2,368) (3,254) (3,029) (2,647) (3,204) (3,126) (3,647) (2,941) (3,803) (3,443) (4,158) (3,077) (3,549) (3,780) (5,177) (3,586) (4,338) (4,821) (5,251) (5,222) (6,191) (6,617) 3,115 3,065 3,626 3,657 3,064 3,017 3,743 3,836 3,502 3,551 3,952 4,177 3,894 3,467 4,199 4,556 3,997 4,314 4,777 5,871 4,740 5,091 6,229 2,099 2,726 2,840 3,355 2,944 (1,208) (1,119) (671) (556) (274) (2,806) (2,509) (3,727) (2,627) (4,666) (4,814) (5,123) (5,864) (5,760) (6,532) (1,177) (1,201) (1,112) (1,324) (1,292) (1,021) (1,482) (1,328) (1,496) (1,308) (1,457) (1,603) (1,668) (1,728) (1,496) (868) (2,336) (1,530) (1,151) (1,515) 568 667 502 362 649 683 598 796 750 910 602 578 990 970 750 645 668 883 780 613 (933) (991) (967) 570 1,329 1,182 (303) (297) (306) (302) (261) (291) (288) (279) (186) (141) (139) (205) (176) (180) (109) (91) (42) (37) (34) (161) (84) (159) (75) (743) (356) (904) (803) (591) (919) (443) (556) (604) (1,223) (641) (1,259) (343) (1,029) (513) (742) (1,703) (1,000) (695) (1,268) (1,621) (1,764) (118) 2,960 3,032 3,024 3,516 3,697 777 763 764 656 760 694 772 806 670 730 773 851 764 817 947 988 851 872 760 1,214 759 800 843 (7,394) (7,325) (8,059) (7,881) (7,704) (1,840) (1,730) (1,962) (1,862) (1,791) (1,820) (1,824) (1,890) (1,915) (2,089) (2,047) (2,008) (1,917)
 (1,944) (2,058) (1,962) (1,619) (1,859) (2,102) (2,124) (2,058) (2,519) (2,408) 73 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 27: BALANCE OF PAYMENTS SUMMARY …… continued … (Millions of Vatu) Capital Account Capital Capital Capital account cr.
account dr. Account Capital & Financial Account Financial Account Direct Invest.

Direct Invest.

Portfolio invest.

Portfolio invest.

Other invest.

Other invest.

abroad in Vanuatu assets liabilities assets liabilities Reserve assets Financial Account Period 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2003 2004 2005 2006 2007 2008 ** - Number of months cr.
Credit dr. Debit 903 1,429 2,405 3,731 3,115 222 216 227 238 272 419 365 373 697 613 671 424 903 1,004 831 993 659 931 894 631 432 469 614 - - - - - - - - - - - - - - - - - - - - - - - - - - - - (117) (28) 157 27 (3) 76 149 - (9) (4) 36 16 (58) (46) (29) 11 (2) (7) (30) 20 5 5 127 263 116 37 - 75 (35) (60) - - - - - - - - 75 (29) - - (6) (61) 1 - - - - - - - - - 6,068 (1,597) 2,896 (3,086) 5,312 2,502 1,105 3,557 (1,096) (2,521) 522 128 274 1,616 (266) 895 651 (397) (4,912) 1,862 361 802 4,682 1,076 (1,248) (828) (1,105) 1,033 (3,778) 4,824 24 2,079 (9,023) (1,648) (393) (2,293) 556 2,861 (60) 600 1,423 (1,805) 1,056 409 364 391 3,340 (1,174) (478) (1,383) (4,599) (2,859) (182) 1,782 739 (1,205) (100) (1,661) (983) (3,598) (833) 123 (89) (13) (121) 73 (397) (468) (869) (210) (261) (258) (254) (398) (1,421) (790) (989) 149 (209) (151) (622) 56 (121) (276) 4,548 3,798 3,156 47 (966) 1,510 1,113 1,835 90 1,178 667 750 1,203 (195) 837 1,021 1,493 499 (520) 443 (375) 443 350 (973) (786) 2,018 565 (88) (82) (85) (84) (81) (65) (19) (21) (21) (21) (22) (21) (21) (21) (21) (21) (21) (21) (21) (21) (21) (18) (17) (22) (12) (14) (10) (19) QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 27: BALANCE OF PAYMENTS SUMMARY …… continued … (Millions of Vatu) Net errors &
 Gross Official Net Reserves Net Reserves Exchange rate (Vatu) Omissions (VT/USD) Reserves (USD) Memorandum Items Period 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2003 2004 2005 2006 2007 2008 (2,645) (2,718) (2,306) (1,150) 1,713 (989) (973) (1,158) 475 (859) (168) (672) (1,019) (367) (227) (1,053) (659) (1,059) 546 (761) 124 600 (281) 772 622 (829) 730 (408) ** - Number of months cr.
Credit dr. Debit Projected** Monthly Import Cover QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 28: INTERNATIONAL INVESTMENT POSITION Period International Investment Position Assets Direct Investment Portfolio Investment Other Investment Reserves Assets Liabilities Portfolio Investment Direct Investment Other Investment Liabilities Net Position 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 50,256
55,758
- 296 245 3 4 - - - - 75 75 74 72 78 50 57 60 - (66,320) (24,534) (17,725) (24,933) (23,491) (5,040) (45,555) (8,051) (7,674) (7,166) (7,099) (4,645) (5,624) (3,366) (3,894) (4,629) (5,836) (6,302) (5,675) (7,066) (5,890) (5,455) (6,460) (6,670) (4,906) (7,987) (8,097) (5,957) QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 29: EXPORTS Principal Exports Period 2002 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3p Q4 Q1 Q2 Q3 2002 2003 2004 2005 2006 2007 2008 Copra Value Tonnes Cocoa Value Tonnes Beef Value Tonnes Timber Value Kava Value Tonnes Coconut Oil Value Tonnes 174 282 446 126 381 485 - 72 - 102 48 70 88 76 121 118 69 138 64 37 25 - - 87 142 96 - 163 218 104 83 156 723 7,339 10,620 15,104 4,319 11,441 10,522 - 3,567 - 3,772 1,652 2,453 3,502 3,013 4,077 4,119 2,506 4,402
 2,213 1,284 822 - - 3,507 5,593 3,762 - - 51 133 38 8 40 135 756 1,532 1,011 1,246 723 - 117 119 65 455 34 702 404 392 66 152 481 312 223 28 591 404 90 633 575 517 - - 156 150 197 181 166 238 223 394 173 229 194 331 111 279 298 259 157 298
 271 324 15 151 153 176 120 177 252 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 16 179 123 152 90 61 71 160 219 318 299 190 148 233 214 137 72 106 - 15 - 84 198 210 120 180 246 380 4,147 2,388 2,941 1,587 1,364 1,512 3,259 5,256 4,641 4,038 3,176 2,457 3,700 4,016 2,794 1,588 2,086 - 22 - 1,154 3,153 3,029 1,194 3,873 3,969 (Millions of Vatu) Re-exports Total Other domestic Other products - QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 30: IMPORTS Period 2002 2003 2004 2005 2006 2007 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 Q2 Q3 2002 2003 2004 2005 2006 2007 2008 Food and live animals tobacco Bev.
And Crude mtrls Mineral , excl.fuels fuels (Millions of Vatu) Imports for home consumption Basic Animal, veg.

manufact.

, and oil fats Chemicals Mach.

and transpt.equip.

Misc.
Goods not specified Total Imports for Re-exports Total Imports(c.i.f) 4,117
QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 31: EXPORTS BY COUNTRY OF CONSIGNMENT (Millions of Vatu) Period EEC
 Countries Japan Australia New South Caledonia Korea New Bangladesh Other MSG Zealand Others Total 2002 2003 2004 2005 2006 2007 255 495 1,441 1,013 416 515 2002 2003 2004 2005 2006 2007 2008 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 Q2 Q3 36 52 58 109 136 99 93 167 311 478 410 242 239 289 282 203 80 153 90 93 - 110 222 183 121 175 260 227 168 207 151 167 164 31 90 45 61 34 62 66 6 49 41 68 49 13 49 43 46 - - - 2 4 2 4 3 3 1 1 1 - - - - - - - - - - - - - - - - - - - - - - 1 2 - - 102 45 5 88 75 - - - - - - - - - - - - - - - - - - QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 32: IMPORTS BY COUNTRY OF CONSIGNMENT (Million Vatu) Period Australia New Zealand Japan France Fiji EU New Caledonia Hong Kong
 Singapore Others Total 2002 2003 2004 2005 2006 2007 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 Q2 Q3 807
- - 291 114 133 115 232 123 133 35 154 152 131 166 245 - - - - - - - - - - - - - - QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 33: COMPANY REGISTRATION IN VANUATU Part A: Number of Companies at the Registry at end of each Year/Quarter Type of company End of Period 2003 2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
 Q2 Q3 2003 2004 2005 2006 2007 2008 Local 1,303 1,369 1,371 1,387 1,731 1337 1279 1299 1303 1320 1351 1342 1369 1402 1354 1364 1371 1,412 1,451 1,471 1,387 1,531 1590 1,622 1,661 1,731 1,792 1,783 International Exempt Overseas Companies 4,464
4,391 4,251 4,367 4,310 4,280 4,327 4,451 4,464 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 Total 5,789 5,987 6,139 6,467 4,588 5,922 5,717 5,849 5,789 5,772 5,843 5,950 5,987 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 Exempt Banks 14 7 7 7 7 34 24 24 14 9 9 9 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 Trust Of Which Hold Licenses as: Exempt Insurance Financial Companies Companies Institutions PART B: Company Registration during individual Year/Quarter 1.
Number of Fresh Registrations Exempt Overseas Local Companies Companies Companies of which Banks 2.

Number International Total of Struck off Companies 3.

Exempt com.
converted to International companies QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 34: SHIPPING REGISTRATION Fresh Ship Registration during the Year/Quarter Ships Deregistered Number of Ships on the registry during the year/ at end of the quarter period Period Total of all Shipping Fees Collected by VMSL (Vatu in Millions) MPIF Trust Funds Collected by VMSL (Vatu in Millions) 2006 2007 72 103 2006 2007 2008 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 35: MAJOR AGRICULTURAL PRODUCTION End of Period Copra Tonnes Value(Mvt) Coconut Oil Tonnes Value(Mvt) Cocoa Tonnes Value(Mvt) Beef Tonnes Value(Mvt) n.a
 Average Prices cocoa Vt/Tonne Coconut oil Vt/Tonne Copra Vt/Tonne 2002 2003 2004 2005 2006 2007 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 Q2 Q3 155.7
- 22 - - 4,954,545 - 41,594 33,936 34,335 94,769 94,000 94,000 100,503 46,476 61,980 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008
 TABLE 36: VISITOR ARRIVALS Non Resident Visitors by mode fo travel Air arrivals by purpose of Visit Period Air Cruiseship Total Stop-over Holiday Visiting freinds Business / Meetings Purposes Other Not Stated 2002 2003 2004 2005 2006 2007 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 Q2 Q3 2002 2003 2004 2005 2006 2007 2008 49,461 50,400 60,610 62,082 68,179 81,345 10,556 11,746 14,194 12,965 10,490 10,529 15,055 14,326 11,543 11,897 19,004 18,225 12,648 13,309 18,507 17,618
Source: National Statistics Office - - - - - - - - 1 1 2 3 6 1797 2,025 - 2,719 - 1,870 - 1888 2,447 2482 2495 2,248 2,543 3,017 3,029 1,389 2,529 3,245 - - - - 29 1 - - - - - - - - - 3 2 3 2 - - - - - - - - - - - - - - - - - - - - - - - - 84 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 37: VISITOR
 ARRIVALS COUNTRY OF ORIGIN / HOTEL OCCUPANCY RATES Period 2002 2003 2004 2005 2006 2007 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 Q2 2002 2003 2004 2005 2006 2007 2008 New New Zealand Caledonia Australia Air arrivals by Country of origin North Other America Pacific Europe Other Countries Not Stated Japan Total Hotels Number Facilities at end of period: Room nights offered Occup.
rate Beds Number nights offereOccup.
rate 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 29 27 23 29 29 29 29 29 29 na na na na na na 992 899 895 902 924 992 991 991 993 924 889 888 895 873 892 939 874 883 901 882 886 951 921 901 924 na na na na na na 91,945 82,229 84,406 86,024 83,083 90,421 94,861 91,152 91,347 84,084 85,580 81,431 77,821 79,554 86,004 96,604 75,463 80718 85704 80934 80,514 83564 87,699 82,212 78,858 na na na na na na 44.2% 46.5% 51.9% 52.3% 38.1% 41.5% 40.5% 48.3% 46.4% 46.6% 38.8% 53.8% 53.7% 48.2% 44.3% 51.9% 64.6% 46.4% 44.9% 61.3% 57.1% 54.0% 45.4% 53.1% 57.6% na na na na na na na na na na na na 202,463 216,604 216,893 215,457 215,727 221102 219,670 225,872 na na na na na na 32.8% 35.3% 40.9% 40.7% 37.3% 29.9% 30.8% 35.2% 35.1% 31.7% 31.4% 41.2% 36.7% 35.2% 33.9% 46.0% 48.5% 39.4% 35.2% 48.5% 39.8% 36.8% 32.9% 38.2% 41.1% na na na na na na 5,050
1,896
- - - 0 15 1 0 8 4 3 - 1 0 0 0 0 - - - - - - - - 233 - 253 321 - 266 - 258 - 239 - 316 - 287 251 296 356 336 468 369 500 430 449 562 477 85 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 38: CONSUMER PRICE INDICES Quarter to previous Quarter) Household Transport Recreation, Supplies & Comm.
Educ., Health etc -0.2 0.1 -0.1 -0.2 0.2 -0.2 -1.0 2.2 0.1 -2.0 0.4 0.4 0.7 -1.3 -0.2 -0.1 -0.1 0.0 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 1.9 0.2 0.3 0.1 0.7 0.8 0.0 2.2 0.1 5.1 0.4 0.2 0.0 0.3 0.5 0.0 0.5 0.1 0.3 -0.3 0.3 0.3 0.6 1.7 0.3 0.0 0.41 2.03 0.56 0.10 4.40 0.15 2.5 0.9 0.9 0.9 0.7 1.2 1.6 1.7 0.4 0.3 1.4 3.8 0.2 -0.5 0.0 2.9 0.1 0.4 0.0 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 Percent ALL GROUPS 0.6 0.7 0.2 0.4 0.5 1.0 0.2 1.6 0.2 0.3 1.4 0.5 1.0 0.0 0.4 0.0 1.2 -0.8 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 Period Average 2002 2003 2004 2005 2006 2007 2002 Q1 Q2 Q3 Q4 2003 Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 Source: Vanuatu Statistics Office Drinks & Tobacco Food Rent, Clothing etc Water, Electricity 0.2 1.0 0.5 0.0 0.7 0.9 -1.8 2.4 1.4 -1.2 -0.4 1.1 2.8 0.5 0.1 0.0 3.2 -1.4 -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 1.8 2.3 0.1 0.8 0.2 2.0 5.8 2.1 -0.5 -0.2 8.8 0.2 0.2 -0.2 0.2 0.2 0.0 0.0 1.5 0.5 1.0 0.2 0.5 0.0 0.2 0.1 6.8 0.7 0.4 0.3 2.6 2.7 0.1 -0.2 0.0 -0.4 1.4 0.5 1.1 0.4 0.3 -1.6 0.0 -0.3 0.4 0.4 -0.5 0.0 0.1 0.2 -1.7 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 0.1 0.2 0.2 -0.2 -0.1 0.0 -1.3 1.1 0.4 0.2 0.1 0.2 1.2 -0.5 -0.5 -0.6 0.1 0.0 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 86 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 39: CONSUMER PRICE INDICES (Quarter to same quarter of previous year) Period End Year
 2002 2003 2004 2005 2006 2007 2002 Q1 Q2 Q3 Q4 2003 Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 Source: Vanuatu Statistics Office Drinks & Tobacco Food Rent, Household Transport Recreation, Clothing etc Water, Supplies Electricity & Comm.
Educ., Health etc ALL GROUPS Percent -0.9 -0.1 -1.4 5.7 2.0 4.6 2.7 1.0 -0.6 -0.9 -1.6 -1.5 0.4 -0.1 0.2 -0.1 -0.3 -1.4 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 -0.8 0.2 -0.4 -0.7 0.7 -1.0 -2.6 1.1 1.4 -0.8 0.6 -1.1 -0.6 0.2 -0.4 -0.9 -1.6 -0.4 0.6 -1.0 -0.8 -0.7 -1.5 0.3 0.8 0.7 0.3 0.3 -1.0 - -1.5 - -1.3 0.6 2.0 0.6 2.1 0.8 2.2 4.0 4.5 3.4 3.8 1.9 -0.1 0.5 - -1.0 0.6 -0.2 0.1 0.0 -0.3 0.1 0.4 1.8 0.9 1.7 1.0 0.4 -0.4 -1.5 -1.0 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 87 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 40: CONSUMER PRICE INDICES BY REGION (Quarter to previous Quarter) 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 Percent Recreation, Educ.
and Health etc Port Vila Luganville ALL GROUPS Port Vila Luganville Period Group Region Average 2002 2003 2004 2005 2006 2007 2002 Q1 Q2 Q3 Q4 Q1 2003 Q2 Q3 Q4 Q1 2004 Q2 Q3 Q4 Q1 2005 Q2 Q3 Q4 Q1 2006 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 0.1 1.0 0.5 0.6 0.7 0.9 -1.5 2.5 1.2 -1.6 0.0 1.1 2.9 0.2 0.1 0.1 3.4 -1.7 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 0.2 0.8 0.5 0.5 0.8 0.8 -3.7 1.6 2.6 0.3 -2.0 1.3 2.1 1.7 0.5 -0.5 2.4 -0.5 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 1.8 2.4 0.1 0.8 0.3 2.1 5.8 2.2 -0.7 -0.3 9.7 0.3 0.1 -0.4 0.0 0.3 0.1 0.0 -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 1.9 1.4 0.2 1.1 -0.1 1.8 5.9 0.8 0.0 1.0 4.0 0.0 0.9 0.7 0.9 -0.2 -0.1 0.0 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 0.0 0.3 0.0 0.0 0.0 0.0 -1.8 1.1 0.7 0.0 0.6 0.3 0.6 -0.3 0.0 0.0 0.0 0.0 -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 0.5 0.1 -0.8 -0.9 -0.4 -0.6 0.8 1.2 -1.4 1.3 -2.0 0.2 3.2 -1.1 -0.2 -3.5 0.8 -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 Source: Vanuatu Statistics Office -0.2 -0.1 -0.1 -0.1 0.2 0.0 -1.2 1.9 0.3 -1.7 -0.2 0.1 1.4 -1.7 -0.2 -0.1 0.0 0.0 -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 -0.2 0.7 -0.1 -0.4 0.1 -1.2 0.0 3.2 -1.5 -2.6 3.0 1.6 -2.6 0.6 -0.1 -0.2 -0.4 0.1 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 2.0 0.2 0.3 0.7 0.5 0.5 -0.2 2.7 0.1 5.5 0.4 0.2 -0.1 0.2 0.7 0.0 0.5 0.0 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 1.0 0.4 0.2
 -0.5 0.4 1.1 0.8 0.0 0.1 2.9 0.7 0.0 0.6 0.2 -0.1 0.0 0.4 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 1.0 0.6 0.9 0.3 0.0 3.4 1.6 0.5 0.9 1.2 2.9 0.2 -0.6 0.1 3.1 0.0 0.4 0.0 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 0.5 2.4 0.3 0.9 0.1 0.7 2.4 -0.7 -0.3 0.7 9.8 0.0 0.0 -0.1 1.1 0.3 -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 0.6 0.8 0.4 0.5 0.5 1.8 0.3 1.8 0.2 0.1 1.7 0.5 1.0 -0.2 0.4 0.1 1.2 0.0 -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 0.3 0.7 0.4 0.6 0.4 0.2 -0.6 0.8 0.5 0.6 0.3 0.6 1.0 0.7 1.0 -0.3 0.9 -0.1 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 0.0 -0.5 0.6 0.6 1.1 0.7 0.4 -1.6 -0.1 0.1 0.5 0.1 -0.4 -0.1 0.1 0.2 -2.1 -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 -0.5 -0.2 0.2 1.3 0.0 2.5 -0.7 -0.2 -1.4 0.1 -1.9 0.0 1.3 -0.2 0.0 0.3 0.2 0.3 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 88 QUARTERLY ECONOMIC REVIEW SEPTEMBER 2008 TABLE 41: CONSUMER PRICE INDICES BY REGION (Quarter 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 Percent Recreation, Educ.
and Health etc Port Vila Luganville ALL GROUPS Port Vila Luganville Period Group Region End Year 2002 2003 2004 2005 2006 2007 2002 Q1 Q2 Q3 Q4 2003 Q1 Q2 Q3 Q4 2004 Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 0.5 4.1 1.9 0.4 2.6 3.4 -1.0 1.3 2.5 0.5 2.0 0.6 2.3 4.1 4.2 3.2 3.8 1.9 4.1 -0.1 -3.3 0.4 3.6 3.6 3.3 2.6 3.4 3.6 4.5 3.4 0.7 3.0 1.9 2.2 3.4 5.5 -2.5 -2.8 0.0 0.7 2.4 2.1 1.6 3.0 5.7 3.8 4.1 1.9 4.6 5.4 0.3 2.2 1.5 3.3 1.8 3.4 1.8 3.4 4.8 5.5 2008 Q1 Q2 Q3 4.3 5.3 10.4 5.6 7.3 17.1 Source: Vanuatu Statistics Office -0.7 -0.4 -0.3 -0.6 0.8 0.0 -3.3 0.5 0.9 -0.7 0.3 -1.5 -0.4 -0.4 -0.4 -0.6 -2 -0.3 -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 -1.0 2.6 -0.5 -0.5 0.4 -4.7 0.6 3.8 2.6 -1.0 2.0 0.4 -0.7 2.6 -0.5 -2.3 0.0 -0.5 -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 - - -1.5 -1.4 -0.8 -0.9 -0.7 2.4 3.0 1.8 0.1 1.8 4.3 1.3 2.5 2.6 2.4 3.8 2.5 3.3 3.0 1.8 1.4 1.6 1.8 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 1.3 2.7 0.8 1.2 1.4
-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 7.9 5.6 0.7 0.3 -0.2 7.2 7.0 7.5 7.7 7.9 5.9 5.0 5.9 5.6 2.5 2.3 1.4 0.7 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 0.0 1.2 0.0 0.2 0.0 0.2 0.0 -0.7 0.0 0.0 2.4 1.6 1.5 1.2 0.6 0.3 -0.3 0.0 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 1.9 0.2 -4.7 -0.7 -1.4 -2.3 0.1 1.2 -0.1 1.9 -0.9 -1.9 2.7 0.2 0.2 -3.5 -5.7 -4.7 -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 -2.1 -0.8 0.6 -1.3 0.1 10.0 1.1 0.8 -0.6 -2.1 -3.4 -3.2 -0.6 -0.8 1.1 1.4 0.1 0.6 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 -0.6 0.2 -1.9 2.8 2.4 4.4 3.0 1.0 -0.5 -0.6 -1.2 -1.2 0.5 0.2 0.0 -0.4 -0.3 -1.9 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 89