CARIBBEAN-ECCB Governor says regional economies improving after COVID-19 pandemic

THE VALLEY, Anguilla, CMC—Eastern Caribbean Central Bank (ECCU) Governor Timothy Antoine says regional recovery from the coronavirus (COVID-19) pandemic remains remarkably resilient.

In his report to the Monetary Council of the Eastern Caribbean Central Bank (ECCB) meeting held over the last weekend, Antoine, in his report titled “Pushing Ahead Amidst Increasing Global Turmoil and Uncertainty,” provided global and Eastern Caribbean Currency Union (ECCU) updates on monetary, credit, and financial conditions for the first half of the year and assessed their potential impact in the near to medium term.

According to the communique issued after the meeting, Antoine said that over the medium term, the global economy is expected to underperform relative to the historical trend and that unabating geopolitical conflicts increase the uncertainty that threatens global and regional prospects.

He said global headline inflation is expected to fall to 5.8 percent in 2024 from the 6.8 percent estimated in 2023 and that ECCU inflation has eased significantly. Still, threats loom from ongoing geopolitical issues that are impacting trade.

“Here in the ECCU, risks are tilted to the downside, notably, the above-average Atlantic Hurricane Season, volatility in revenues from Citizenship by Investment (CBI) Programmes, inflationary pressures, and geopolitical risks,” the communique said.

It said that the total foreign exchange reserves in the ECCU—Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines—stand at EC$5.2 billion (One EC dollar = US$0.37 cents).

The Monetary Council forecasts regional economic growth of 5.2 percent in 2024, compared with the provisional 4.5 percent recorded in 2023.

It said that almost all ECCU countries recorded double-digit increases in tourist arrivals for the first quarter of this year. The ongoing rise in regional airlift is expected to boost arrivals further intra-regionally.

The Monetary Council was told that the EC currency “remains strong, with the backing ratio reaching levels not recorded since 2020 before the pandemic.

“The backing ratio is approaching 97 percent (96.64 percent as of 12 July), up from 95.13 percent (as of 09 February 2024),” the communique added.

It said that having considered the state of monetary, financial, and credit conditions in the ECCU and on the recommendation of the Governor, the Monetary Council agreed to maintain the minimum savings rate at two percent and the discount rate at three percent for short-term credit and 4.5 percent for long-term credit.

The Minimum Savings Rate (MSR) is the lowest rate commercial banks can offer on savings deposits. The Central Bank’s Discount Rate is the rate the ECCB lends to governments and commercial banks.

The Monetary Council was advised that the ECCU banking system remains resilient and stable, with high liquidity.

The Council was told that monetary aggregates (money supply) continue to expand at “a healthy pace, contributing to buoyant levels of liquidity.

“This is likely attributable to improving economic conditions and job markets. Interest rates have remained low, and credit conditions have eased as commercial banks increase lending. Banks are generally well-capitalized. Deposits continue to grow.”

The communique noted that fiscal performance has improved in tandem with economic recovery and that the debt to gross domestic product (GDP) ratio has declined to 75.7 percent at the end of last year from its peak of 88 percent at the end of 2020.

The weekend meeting, which was chaired by the Premier and Minister of Finance of Anguilla, Dr Ellis L Webster, was also attended by Antigua and Barbuda Prime Minister Gaston Browne, the Economic Development, Council Alternate for Grenada, Lennox Andrews, the Premier and Minister of Finance of Montserrat, Joseph Easton Farrell, the St. Kitts-Nevis Prime Minister Dr. Terrance Drew, and Wayne Girard, Minister in the Ministry of Finance, Council Alternate for St. Lucia.