KINGSTOWN, St. Vincent, CMC- The monetary and credit conditions in the Eastern Caribbean Currency Union (ECCU), as well as the Eastern Caribbean (EC) dollar and banking conditions, remain stable and accommodative, even as the “global environment is marked by uncertainty and complexity.”
This was reported by the Governor of the ECCU, Timothy Antoine, at the 105th meeting of the Monetary Council in St. Vincent over the weekend.
The communique issued by the meeting stated that policymakers were “facing a trilemma: attempting to control inflation while at the same time averting a recession and maintaining financial stability.”
Despite these challenges, the Governor’s Report on monetary and credit conditions in the currency union for the first half of this year stated that “the foreign reserve backing for the EC Dollar remains strong. The current is 92.4 percent, well above the statutory minimum requirement of 60.0 percent.
“ECCB’s foreign assets are now around $5.2 billion compared with $5.04 billion at the end of 2022; the pre-pandemic (2019) level was $4.58 billion.”
The report added that fiscal performances in ECCB member countries will continue to improve from 2021 due to higher economic activity and contribute to reducing public debt.
At the end of 2022, public debt in the ECCU stood at 78 percent of gross domestic product (DGP), a 10 percent reduction from 88 percent in 2020, and ECCU governments say they are committed to reducing it to 60 percent by 2035.
“To secure a path of transformational growth, the policy mix at the national level for each ECCB Member Country should include sustainable fiscal solutions that can prioritize implementation of reforms while maintaining long-term debt sustainability,” the report said, adding that the “Regional Government Securities Market (RGSM) remains a key source of public sector financing.”
The Council was told that despite the ECCU’s current economic recovery, growth for 2023 is projected to decelerate to an estimated 6.4 percent, “down 4.8 percentage points from 2022 when it was 11.2 percent.
Key risk factors likely to affect growth are persistently elevated commodity prices, “severe global financial conditions, health pandemics, and natural disasters, as well as global headwinds that could adversely affect the region’s Tourism,” which is said to have returned to pre-pandemic levels and is driving the economic recovery.
“In 2021, economic growth in the ECCU was recorded at 5.5 percent.
The growth opportunities for the ECCU “include investments in food and nutrition security and other policies and projects that can build resilience against shocks.
“Potential areas of opportunity for the ECCU during this decade comprise the elements of the ECCB’s “Big Push”: Digital Transformation, Energy Security, Food & Nutrition Security, Human Capital Development and Wealth Creation.”
The ECCU groups Anguilla, Antigua & Barbuda islands, Dominica, Grenada, Montserrat, St. Kitts/Nevis, St. Lucia, and St. Vincent & the Grenadines.
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