Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1696589151856.pdf (Vanuatu)
RESERVE BANK OF VANUATU FINANCIAL & ECONOMIC ANALYSIS: March 2016 The news items covered in this publication do not necessarily imply any judgment by the Bank on the accuracy of the information or any endorsement or acceptance of such news Issue 211 March 2016 International Developments Earlier this year, the IMF downgraded its forecast on global economic growth.

It now expects economic activity to increase 3.4 percent this year followed by 3.6 percent in 2017.
China's economy, the second- biggest in the world, is growing at the slowest rate in 25 years.

According to the IMF, combination of monetary and fiscal policy and structural reforms is needed to strengthen growth and guard against risks, ranging from unfulfilled infrastructure requirements in the U.S. to deflation in Japan.
The Policy interest rate in the US was maintained at 0.5 percent during the Federal Open Market Committee (FOMC) meeting in March reflecting stable trend of economic data over the period since the last FOMC meeting.

In March, the economy added 215,000 jobs, little less than the gains of 242,000 jobs in February.

The increase in jobs was recorded mainly in the services sector, particularly retail, health and education.

This has caused positive speculation of the US economy going forward.
In terms of exchange rate trade, in March, the USD depreciated significantly against the Vatu by 4.1 percent In Australia, the cash rate remained unchanged at 2 percent during the latest Board meeting in April reflecting continued growth in demand and lower inflation.

Growth in labour costs remain subdued and credit growth to households continues at a moderate pace.
In addition, current low interest rates are supporting demand, while supervisory measures are working to emphasise prudent lending standards and so to contain risk in the housing markets.

The AUD has appreciated rather recently reflecting some increase in commodity prices and also monetary developments globally.

Therefore, the AUD appreciated sharply by 3.2 percent against the Vatu over the month of March.
In New Zealand, the Reserve Bank of New Zealand (RBNZ) reduced its official cash rate by 25 basis points to 2.25 percent in early March 2016 in order to support continued expansion of the economy in the medium term.

According to developments, the dairy sector continues to face challenges with the low global commodity prices.

The trade-weighted exchange rate is more than 4 percent higher than projected in December, and a decline would be appropriate given the weakness in export prices.
Consequently, the NZD appreciated slightly against the Vatu by 0.3 percent in March.

In the Euro area, latest data shows that the ECB has reduced its official rate to 0.0 percent in March 2016 in order to support the slower recovery in the region.

Inflation continues to remain low due to sharp decline in energy prices.

However, challenges still remain in terms of very low inflation, high unemployment and rising external risks.
As a result, the Euro depreciated against the Vatu by 0.4 percent during the reviewed period of March.

Domestic Developments Real Sector Export earnings in January 2016 recorded VT414 million.

This is a decline of 29.8 percent over the month, while an increase of 26.4 percent compared to January 2015.

Out of these total, 82 percent was export out of Luganville, while 18 percent was from Port Vila.
For the main export commodities, copra contributed to the largest share of 57 percent of total export earnings, followed by coconut oil at 13 percent, cocoa at 8.9 percent and beef at 5 percent.

Total imports for January 2016 recorded VT3,287 million, a decline of 0.9 percent from December 2015, but an increase of 30.3 percent compared to January 2015.
From the total, 19.4 percent was imports of food items, tobacco and beverages 3.0 percent, crude minerals 0.9 percent, 14.1 percent mineral fuels, 0.3 Page 1 of 7 percent oils & fats, chemical products 5.4 percent, 11.7 percent basic manufacture products, 39.5 percent machines and equipments, and miscellaneous made up 5.4 percent of total imports .

The resulting trade balance was a deficit of VT2,938 million - VT204 million larger than deficit recorded in December 2015.
Chart 1: Year on Year Growth (Monthly Data) by 0.3 percent owing mainly to a decline in net claims on the central government, which outweighs the slight growth in lending extended to other economic sectors.

The Central Government’s net credit position vis-a-vis the banking system fell by 3.8 percent and 260.8 percent in February and over the year to February 2015.

The improvement during the month reflected the accumulation in the government deposits held with both the ODCs’ and the Reserve Bank.
Claims on the central government by OFIs1 increased by VT301 million to reach VT3, 750 million in February.

Total loans extended by ODCs to various sectors are depicted in table A4.1.

Loans extended by OFI’s declined by 1.3 percent to reach VT1,085.9 million in February.

Chart 2: Determinants of Money Supply (yoy% Change) Tourism arrivals during the month of January 2016 recorded 36,549 tourists.
This is a decline of 10.4 percent from December 2015, but an increase of 3.1 percent over the year from January 2015.

Air visitors declined 7.3 percent and 0.5 percent over the month and year, respectively.

The decline over the year was related to decline in the number of Australian visitors that fell by 3.6 percent over the year, New Caledonians 28.7 percent and Other Pacific Countries declining 21.5 percent over the year.
In terms of purpose of visit, there were declines in arrivals for businesses and conferences, by 3.7 percent and other purposes by 26.2 percent.

Holiday visitors have increased 1.1 percent compared to thr same month of last year as well as those tourists coming to visit friends and relatives 17.0 percent compared to January 2015.

Cruise arrivals increased 4.3 percent compared to January 2015, attributed mainly to increase number of cruise visits to Vanuatu during the month.
Monetary Developments Money supply rose by 0.6 percent in February and 10.1 percent over the year to February 2015.

This growth was driven mainly by persistent increases in net foreign assets (NFA), domestic credit continued the downward trend.

Total NFA increased by 2.6 percent owing mainly to the increase in the NFA holdings of ODC’s while, the RBV’s NFA declined by 0.1 percent.

Moreover, the current level of NFA was higher by 59.1 percent over the year to February 2016.
Domestic credit declined Open Market Operations (OMO) In March 2016, the RBV issued VT400 million worth of RBV notes, compared to VT200 million issued in February.

reached subscriptions VT1,200 million compared to VT600 million tendered during February 2016. received Total The amount allotted and yields on respective notes are depicted in Table 2.
Table 2: Amount Allotted (Millions of Vatu) and Yields on RBV Notes (Percent) 1 OFI: Other Financial Institutions covers Credit Corporation; Vanuatu Agriculture Bank; and Vanuatu National Provident Fund Page 2 of 7 -40-30-20-100102030405060708090100-40-30-20-100102030405060708090100Feb-12Feb-13Feb-14Feb-15Feb-16NFAM2Domestic Claims%%Source:Other Depository Corporations; Reserve Bank The total amount of matured RBV notes was at VT245 million in March, leaving outstanding notes at VT330 million, compared to VT270 million in the previous month.
Chart 4: Outstanding RBV Notes (Levels, millions of Vatu, month-End Data) Term Amount Allotted Yield End Mar.

2016 Yield End Feb. 2016 7 days 90 14 days 28 days 63 days 91 days 90 80 70 70 1.35 1.45 1.75 1.80 1.85 1.35 1.45 1.75 1.80 1.85 Chart 3 below shows the yield on the 91-days RBV notes, which is tied to the RBV policy rate after policy changes made in the aftermath of Tropical Cyclone Pam in March 2015.
Chart 3: Yield on 91-days RBV Note (Percentage, Month-end Position) Page 3 of 7 01234560123456Mar-15Jun-15Sep-15Dec-15Mar-1691 days 02004006008001000120014001600180020000200400600800100012001400160018002000Mar-15Jun-15Sep-15Dec-15Mar-16RBV Notes Outstanding Page 4 of 7 TABLE A1 : CONDENSED BALANCE SHEET OF THE RESERVE BANK OF VANUATU (In Millions Vatu) End of PeriodFeb-15Nov-15Jan-16Feb-16%Change1 Month3 months12monthsClaims on nonresidents19,332.8 29,817.3 29,800.2 29,731.5 -0.2-0.353.8Monetary gold and SDR holdings596.6 608.2 615.4 607.3 -1.3-0.11.8 Reserve Assets18,736.1 29,209.1 29,184.8 29,124.2 -0.2-0.355.4Currency and Deposits8.7 9.3 14.6 10.1 -30.59.316.6National currency8.7 9.3 14.6 10.1 -30.59.316.6Securities other than shares2,397.8 2,371.2 2,371.2 2,631.7 11.011.09.8Central government2,397.8 2,371.2 2,371.2 2,631.7 11.011.09.8Loans68.0 93.3 80.3 100.9 25.68.148.3Other depository corporations6.7 - 20.0 199.4Other residents sectors68.0 86.6 80.3 80.9 0.7-6.618.9Other accounts receivable577.3 573.3 734.2 867.7 18.251.350.3Trade credit and advances59.4 12.7 132.4 109.0 -17.7755.583.5Settlement accounts51.3 47.8 117.1 284.2 142.7493.9454.1 Miscellaneous Assets466.7 512.7 484.7 474.5 -2.1-7.41.7Nonfinancial assets1,389.2 1,356.7 1,348.5 1,344.6 -0.3-0.9-3.2TOTAL ASSETS23,773.8 34,221.1 34,349.1 34,686.5 1.01.445.9Monetary Base16,766.0 20,385.3 19,915.1 19,613.7 -1.5-3.817.0Currency in Circulation5,141.6 6,075.6 5,983.6 5,692.2 -4.9-6.310.7Currency Other Depository Corporations ( Commecial banks cash)1,368.6 1,734.3 1,761.4 1,907.6 8.310.039.4Liabilities to Other Depository Corporations 10,255.8 12,575.5 12,170.1 12,013.8 -1.3-4.517.1 Reserve Deposits 3,238.2 2,586.0 2,619.9 2,630.6 0.41.7-18.8 Other Liablities7,017.6 9,989.5 9,550.2 9,383.2 -1.7-6.133.7Liabilities to Central Government3,133.6 7,508.1 8,076.2 8,619.3 6.714.8175.1Deposits2,761.2 7,124.6 7,688.2 8,234.0 7.115.6198.2OtherLiabilities to non residents133.3 2,800.1 2,786.3 2,767.7 -0.7-1.21976.4Deposits133.3 2,800.1 2,786.3 2,767.7
 -0.7-1.21976.4Liabilities to the IMF- Central Government 372.4 383.5 388.0 385.3 -0.70.53.5Securities other than shares437.7 438.6 343.9 269.0 -21.8-38.7-38.5Central Bank437.7 438.6 343.9 269.0 -21.8-38.7-38.5LoansOther accounts payable347.9 341.4 471.9 688.0 45.8101.597.8Trade credit and advances321.5 306.2 322.6 320.6 -0.64.7-0.3Other Sectors26.4 35.1 149.4 367.4 146.0945.91293.3o/w Settlement Accounts17.4 25.6 131.4 354.0 169.41,284.21935.3Shares and other equity528.6 248.3 226.8 217.6 -4.1-12.4-58.8SDR Allocation2,426.8 2,499.4 2,529.0 2,511.3 -0.70.53.5TOTAL LIABILITIES23,773.8 34,221.1 34,349.1 34,686.5 1.01.445.9 Page 5 of 7 TABLE A2a : CONDENSED BALANCE SHEET OF OTHER DEPOSITORY CORPORATIONS IN VANUATU ( In Millions VT)END OF PERIODFeb-15Nov-15Jan-16Feb-16%Change1 Month3 months12 MonthsDomestic currencyMonetary gold and SDRDeposits with RBVCurrency and deposits20,962.9 25,647.9 24,293.1 25,512.4 5.0-0.521.7Currency1,501.1 2,124.5 2,168.2 2,381.2 9.812.158.6 National1,368.6 1,734.3 1,761.4 1,907.6 8.310.039.4 Foreign132.5 390.2 406.8 473.6 16.421.4257.5Transferable deposits14,042.8 18,543.4 16,186.6 17,101.6 5.7-7.821.8In Local currency: Central Bank10,255.8 12,575.5 12,170.1 12,013.8 -1.3-4.517.1 Nonresidents11.4 16.6 32.2 18.4 -42.910.561.5 Head offices and Branches(0) - - - Other depository corporations11.4 16.6 32.2 18.4 -42.910.560.7In foreign currency: Nonresidents3,775.7 5,951.3 3,984.3 5,069.4 27.2-14.834.3 Head offices and Branches1,094.8 1,704.1 2,130.4 1,995.1 -6.417.182.2 Other depository corporations2,680.8 4,247.2 1,853.8 3,074.2 65.8-27.614.7Other deposits 5,419.0 4,980.0 5,938.4 6,029.6 1.521.111.3In Local currency: Other depository corporations397.7 405.4 405.4 408.0 0.60.62.6Nonresidents- - - Other depository corporations- - - In foreign currency: Nonresidents5,021.3 4,574.6 5,532.9 5,621.6 1.622.912.0 Head offices and Branches2,170.6 2,097.2 2,268.8 2,070.4 -8.7-1.3-4.6 Other depository corporations2,850.7 2,477.3 3,264.2 3,551.2 8.843.324.6Securities other than
 shares1,025.2 1,126.1 1,031.4 1,156.5 12.12.712.8 Central Bank437.7 438.6 343.9 269.0 -21.8-38.7-38.5 Central Government587.5 687.5 687.5 887.5 29.129.151.1Loans57,104.3 57,664.2 58,025.9 58,335.6 0.51.22.2 Other depository corporations0.0 0.0 0.0 0.0 0.00.014.3 Other financial corporations48.6 45.3 44.6 44.1 -1.2-2.6-9.3 Central government- 100.0 State and local government75.8 61.4 62.1 96.3 55.256.827.1 Public nonfinancial corporations1,247.2 1,204.7 1,326.0 1,236.0 -6.82.6-0.9 Other nonfinancial corporations26,162.5 25,185.9 25,422.4 25,412.5 0.00.9-2.9 Other residents sectors28,172.3 29,894.1 29,647.4 29,855.3 0.7-0.16.0 Nonresidents1,397.9 1,272.8 1,523.3 1,591.5 4.525.013.8Interbank Funds sold- - - - Other accounts receivable 3,270.8 2,734.1 3,105.3 2,770.7 -10.81.3-15.3 Trade credit and advances190.3 67.4 220.2 224.0 1.7232.517.7 Settlement accounts2,296.4 1,616.9 1,671.5 1,667.5 -0.23.1-27.4 Miscellaneous assets items784.0 1,049.9 1,213.6 879.3 -27.5-16.312.2Nonfinancial assets4,410.5 4,270.9 4,296.2 4,312.4 0.41.0-2.2TOTAL ASSETS86,773.7 91,443.3 90,751.9 92,087.7 1.50.76.1 Page 6 of 7 TABLE A2b : CONDENSED BALANCE SHEET OF OTHER DEPOSITORY CORPORATIONS IN VANUATU ( In Millions VT)END OF PERIODFeb-15Nov-15Jan-16Feb-16%Change1 Month3 months12 MonthsDeposits63,123.8 69,886.9 69,032.3 70,998.0 2.81.612.5Transferable deposits27,738.9 34,799.3 33,835.1 35,961.8 6.33.329.6In Local currency: 16,691.7 21,162.4 20,941.6 21,201.3 1.20.227.0 Other depository corporation272.5 98.2 130.6 130.6 0.033.0-52.1 Other financial corporations1,985.6 2,899.2 2,411.6 2,762.9 14.6-4.739.1 Central government876.3 824.3 1,046.2 898.2 -14.29.02.5 State and local governments57.6 60.5 44.0 64.5 46.76.612.1 Public nonfinancial coporations258.2 319.1 341.8 395.7 15.824.053.2 Other non financial coporations4,847.4 6,634.5 6,479.0 6,651.6 2.70.337.2 Other residents sectors8,394.1 10,326.7 10,488.5 10,297.8 -1.8-0.322.7 Non-residents1,042.0 1,450.4 1,441.8 1,243.0 -13.8-14.319.3 Other
 Depository and financial corporations0.1 8.5 71.4 6.6 -90.8-23.04867.4 Other non residents1,041.9 1,441.9 1,370.4 1,236.4 -9.8-14.218.7In Foreign currency: 7,587.2 9,969.9 9,134.3 9,996.3 9.40.331.8 Other depository corporation245.8 236.4 336.4 398.5 18.568.662.2 Other financial corporations325.6 271.6 377.5 354.8 -6.030.69.0 Central government323.5 618.3 424.2 909.3 114.447.1181.0 Public nonfinancial coporations288.5 242.1 255.1 181.2 -29.0-25.2-37.2 Other non financial coporations4,357.2 6,248.6 5,438.5 6,089.6 12.0-2.539.8 Other residents sectors2,046.6 2,352.9 2,302.6 2,052.5 -10.9-12.80.3 Non-residents2,417.9 2,216.6 2,317.3 3,521.2 52.058.945.6 Head office and Branches181.6 - 8.3 334.8 3,941.984.3 Other Depository and financial corporations165.6 11.4 20.3 4.7 -76.9-58.8-97.2 Other non residents2,070.7 2,205.2 2,288.7 3,181.8 39.044.353.7Other deposits 35,384.9 35,087.5 35,197.2 35,036.1 -0.5-0.1-1.0In Local currency: 22,336.3 21,946.3 22,081.8 21,986.5 -0.40.2-1.6 Other depository corporation247.9 307.2 307.6 310.6 1.01.125.3 Other financial corporations4,519.3 3,447.9 3,134.4 3,073.2 -2.0-10.9-32.0 Central government845.9 733.3 1,135.4 1,108.3 -2.451.131.0 State and local governments94.2 98.1 99.4 100.1 0.82.16.3 Public nonfinancial coporations625.2 712.2 909.0 711.1 -21.8-0.213.7 Other non financial coporations3,955.5 4,113.1 3,758.6 3,907.0 4.0-5.0-1.2 Other residents sectors12,048.2 12,534.5 12,737.5 12,776.2 0.31.96.0 Non-residents2,056.6 1,820.7 2,013.1 2,020.8 0.411.0-1.7 Other Depository and financial corporations0.1 - - - Other non residents2,056.5 1,820.7 2,013.1 2,020.8 0.411.0-1.7In Foreign currency: 8,752.8 8,835.8 8,430.9 8,399.9 -0.4-4.9-4.0 Other depository corporation143.6 283.0 228.8 226.4 -1.1-20.057.6 Other financial corporations1,673.4 1,655.7 1,464.2 1,458.7 -0.4-11.9-12.8 Central government- - - - Public nonfinancial coporations104.5 109.2 109.4 108.8 -0.5-0.34.1 Other non financial coporations2,320.6 1,597.3 1,260.9 1,251.6 -0.7-21.6-46.1
 Other residents sectors4,510.6 5,190.5 5,367.6 5,354.3 -0.23.218.7 Non-residents2,239.2 2,484.7 2,671.4 2,629.0 -1.65.817.4 Other Depository and financial corporations47.1 40.2 39.7 39.9 0.7-0.8-15.3 Other non residents2,192.0 2,444.5 2,631.7 2,589.1 -1.65.918.1Loans2,996.1 2,265.1 2,143.3 1,785.9 -16.7-21.2-40.4 Other depository Corporations- - Non residents2,996.1 2,265.1 2,143.3 1,785.9 -16.7-21.2-40.4 Head office and Branches2,005.9 1,687.3 1,685.1 1,729.1 2.62.5-13.8 Other financial corporations990.2 577.8 458.3 56.8 -87.6-90.2-94.3Other accounts payable10,778.5 9,982.6 10,056.2 9,837.5 -2.2-1.5-8.7 Trade credit and advances118.2 177.1 157.8 129.0 -18.3-27.29.1 Settlement accounts2,198.8 1,582.5 1,626.4 1,599.8 -1.61.1-27.2 Provisions for losses1,748.7 1,817.8 1,689.1 1,678.1 -0.7-7.7-4.0 Accumulated depreciation2,293.0 2,209.6 2,281.1 2,304.6 1.04.30.5 Miscellaneous liability items4,419.8 4,195.7 4,301.7 4,126.1 -4.1-1.7-6.6Shares and other equity9,875.3 9,308.7 9,520.0 9,466.3 -0.61.7-4.1TOTAL LIABILITIES86,773.7 91,443.3 90,751.9 92,087.7 1.50.76.1 Page 7 of 7 TABLE A3 : MONETARY SURVEY: A CONSOLIDATED STATEMENTS OF ACCOUNTS OF THE MONETARY INSTITUTIONS (MVT) END OF PERIODFeb-15Nov-15Jan-16Feb-16%Change1 Month3 months12 Months1.
Net Foreign Assets16,360.326,486.625,378.326,027.82.6-1.759.1Monetary Authorities (Net)16,772.624,517.824,484.924,452.5-0.1-0.345.8Other Depository Corporations (Net)(412.3)1,968.8893.31,575.376.3-20.0482.12.
Net Domestic Claims42,103.539,327.638,588.238,332.7-0.7-2.5-9.0(a) Domestic Claims53,580.349,852.948,959.748,809.3-0.3-2.1-8.9(i) Net claims on central government(2,194.0)(6,625.2)(7,623.2)(7,915.8)-3.8-19.5-260.8 Monetary Authorities(735.7)(5,136.9)(5,705.0)(5,987.6)-5.0-16.6-713.8 Other Depository Corporations (1,458.3)(1,488.3)(1,918.3)(1,928.2)-0.5-29.6-32.2(ii) Claims on other Sectors55,774.456,478.056,582.956,725.00.30.41.7Other Financial Corporations 48.645.344.644.1-1.2-2.6-9.3State and local government75.861.462.196.355.256.827.1Public nonfinancial corporations1,247.21,204.71,326.01,236.0-6.82.6-0.9Other nonfinancial corporations26,162.525,185.925,422.425,412.50.00.9-2.9Other residents sectors28,240.329,980.829,727.829,936.20.7-0.16.0(b) Other items (net)(11,476.8)(10,525.3)(10,371.4)(10,476.5)1.0-0.5-8.73.
Broad Money (M2)58,463.965,814.263,966.564,360.50.6-2.210.1(a) Money (M1)28,220.635,765.434,589.235,082.41.4-1.924.3(i) Currency in circulation5,141.66,075.65,983.65,692.2-4.9-6.310.7(ii) Transferable deposits23,079.129,689.828,605.629,390.22.7-1.027.3(b) Quasi-money30,243.230,048.829,377.329,278.1-0.3-2.6-3.2 Other Deposits30,243.230,048.829,377.329,278.1-0.3-2.6-3.2Table A4: Other Depository Corporations Sectoral Distribution of Loans and Advances in Vatu and Foreign Currency (MVT)YOY % ChangeSECTORVTFCTotalVTFCTotalVTFCTotalDepository Institutions Domestic0.00.00.00.00.00.014.314.3Other Financial Corporations Domestic48.60.048.644.10.044.1-9.3-9.3Central Government0.00.00.0100.00.0100.0Provincial Assemblies & Local Government75.80.075.896.30.096.327.127.1Statutory Non-financial Corporations Domestic678.3568.91247.2898.6337.41236.032.5-40.7-0.9Manufacturing1411.4264.81676.2899.1272.91172.0-36.33.1-30.1Agriculture427.444.7472.1405.947.3453.2-5.05.8-4.0 Public Utilities 6.9156.9163.87.0143.1150.11.1-8.8-8.4 Forestry 36.00.036.028.10.028.1-21.8-21.8Fisheries9.60.09.62.90.02.9-70.3-70.2 Mining & Quarrying 62.90.062.9122.00.0122.093.893.8 Construction 2724.8822.03546.82603.31293.83897.1-4.557.49.9 Distribution (Wholesale and Retail) 4987.7555.85543.54575.3531.25106.5-8.3-4.4-7.9 Tourism 1643.54657.36300.91925.34468.06393.317.1-4.11.5 Transport 542.4106.8649.2629.7214.3844.016.1100.730.0 Communications 632.0845.81477.8549.7879.11428.8-13.03.9-3.3 Entertainment & Catering 648.8167.5816.3806.6165.9972.524.3-1.019.1 Professional & Other Services 3463.41944.05407.32934.01908.14842.1-15.3-1.8-10.5 Housing & Land Purchases 15134.41319.216453.615168.82476.817645.60.287.87.2 Other individual 8181.23247.911429.09437.32477.011914.315.4-23.74.2 Non Profit Institutions Serving Households 289.70.0289.7295.50.0295.52.02.0 Grand Total 41,004.9 14,701.4 55,706.3 41,529.4 15,214.8 56,744.2 1.33.51.9Feb-16Feb-15