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International Monetary Fund
This Financial System Stability Assessment on the Eastern Caribbean Currency Union (ECCU) reviews overall stability assessment. The fiscal position of the governments in the region has deteriorated sharply in recent years. A source of strength of the ECCU has been the large historical presence of strong foreign banks. However, the structure of the banking industry is changing with the entry of more aggressive regional banks, and the share of privately owned banks has increased. The limited activity of the organized ECCU securities markets reflects the small number of securities available for trading.
International Monetary Fund. Western Hemisphere Dept.
This 2018 Article IV Consultation highlights that the GDP growth in St. Lucia reached 3 percent in 2017, sustained by robust activity in several sectors. Favorable external conditions, coupled with hotel expansions and the addition of new flights, generated a strong recovery in tourism, with stay-over arrivals rising by 11 percent, the fastest growth in the Caribbean. Backed by strong tourism inflows, the current account balance strengthened. Unemployment declined from 21.3 percent in 2016 to 20.2 percent in 2017, but youth unemployment remains high at 38.5 percent and labor force participation has fallen. The short-term outlook is favorable, but prospects beyond that are sobering. GDP growth is expected to remain buoyant in the near term.
International Monetary Fund. Western Hemisphere Dept.
The fallout from the COVID-19 crisis is hitting ECCU economies hard. Tourism receipts (accounting for nearly 40 percent of GDP) have dried up, as tourist arrivals have come to a grinding halt. The authorities successfully contained the spread of the virus at the onset of the pandemic by largely closing the borders, but a reopening of the economies since the summer has led to a surge in COVID cases. The ECCU economy is projected to contract by 16 percent in 2020 and by a further near ½ percent in 2021. Fiscal positions have deteriorated sharply, and public debt is projected to reach near 90 percent of GDP in 2021 and remain at an elevated level for years to come. Headline indicators suggest the financial system is relatively sound with ample liquidity buffers, but nonperforming loans are expected to rise significantly. The outlook is clouded by exceptionally high risks, including from the uncertainty concerning the evolution of the pandemic.
International Monetary Fund
The Eastern Caribbean Currency Union (ECCU) countries financial system has increasingly come under stress particularly through weakly supervised nonbank and offshore financial sectors with knock-on effects to domestic banks. The staff report focuses on ECCU’s 2009 discussion on common policies of member countries on economic development and policies. In response, ECCU authorities have accelerated the establishment of national Single Regulatory Units and the passage of harmonized legislation to strengthen then regulation and supervision of nonbanks and offshore institutions.
International Monetary Fund
This Selected Issues paper analyzes the income dispersion and comovement in the Eastern Caribbean Currency Union region. It finds that incomes are diverging, with the Leeward Islands converging to a higher income level than the Windward Islands. The paper examines the macroeconomic impact of trade preference erosion on the Windward Islands and demonstrates the substantial impact from preference erosion on growth, trade balances, and fiscal positions. The paper also analyzes the size of the informal economy in the Caribbean.
International Monetary Fund
The Eastern Caribbean Currency Union (ECCU) has made significant progress in improving the quality and quantity of the macroeconomic statistics it produces and disseminates to the public. The Selected Issues Paper discusses prospects and challenges for credit unions in the ECCU. It reviews the current state of macroeconomic statistics, outlines progress that has been made, and identifies outstanding challenges. It also describes technical assistance to the region and presents the challenges for the production of macroeconomic statistics in small island states.
International Monetary Fund
The 2011 Article IV Consultation highlights that low growth is expected for Montserrat in 2011 after sharp output contractions in 2009–10. Stress in the financial sector and slower-than-expected development of major capital investment projects continue to limit prospects for growth. Directors have welcomed the development of a strategy for addressing financial vulnerabilities and the initial progress in implementing it. They have supported preemptive action to minimize costs and risks and preparation of an action plan spelling out the roles of key players.
International Monetary Fund. Western Hemisphere Dept.
This paper presents IMF’s 2019 Discussion on Common Policies of Member Countries of the Eastern Caribbean Currency Union (ECCU). ECCU’s gross domestic product (GDP) growth accelerated from 3/4 percent in 2017 to 3 3/4 percent in 2018, reflecting buoyancy in the tourism sector, sizable Citizenship-by-Investment (CBI) inflows, and a recovery from the 2017 hurricanes in Anguilla and Dominica, which were supported by large public investments in reconstruction. Fiscal deficits increased in 2018–2019, but they have remained moderate. Efforts are needed to streamline, and re-balance tax incentives based on clear principles consistent with international best practices. External imbalances are sizable and significant financial sector vulnerabilities affect both banks and non-banks. Growth is projected to gradually moderate toward its long-term average of 2 1/4 percent as the cyclical momentum normalizes and CBI inflows ease. These trends would also contribute to wider fiscal deficits, ending the downward drift in public debt dynamics. The outlook is clouded by downside risks, including a possible intensification of natural disasters and financial sector weaknesses.