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International Monetary Fund. Western Hemisphere Dept.

management. 28. The ECCU has been a major recipient of technical assistance in macroeconomic analysis and programming . Over the past year, training and TA efforts have concentrated on strengthening institutional structures for policy making, as well as core training in macroeconomic and fiscal forecasting. Two regional workshops were delivered, with the first focusing on macroeconomic forecasting, and the second on revenue forecasting and tax policy analysis. ECCU member states had a strong representation at both workshops. 29. The concerted effort to implement

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. 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

receipts increased, albeit marginally. Despite the robustness of the Caribbean’s share of world tourism in the period post-September 11, the ECCU and its CARICOM partners have lost competitiveness in a global sense, as demonstrated by the reduction in the region’s world tourist arrivals share, and vis-à-vis newly emergent Caribbean destinations. In order to enhance its external competitiveness and regain some of its lost ground, ECCU member states should adopt policies to address both price and non-price competitiveness. Measures to address price

International Monetary Fund. Western Hemisphere Dept.

amendments . The legislation allows for necessary reforms to strengthen the bank supervision and resolution framework and create a regional asset management company and will facilitate the regional financial sector resolution strategy. Unanimous ratification by ECCU member states is required. St. Kitts and Nevis was the last of the independent ECCU states to pass the law. The Bill is still being discussed in Anguilla and Montserrat, the two British dependencies, with no timeline as to when it would be passed. 4. The authorities have made an early repurchase of SDR4

International Monetary Fund. Western Hemisphere Dept.

AML/CFT continue to change and are adopted and implemented at significant cost. Enhancing capacity to address these issues remains a priority. Our authorities look to the Fund and other multilateral institutions for the technical support to continue to enhance the AML/CFT framework and leveraging digital tools for transaction monitoring. Fiscal Policy and Debt Management The pandemic has worsened the fiscal situation of ECCU member states . Largely as a result of steep declines in GDP, the ECCB has recommended that member countries delay the achievement of

Mr. Montfort Mlachila

stability. In general, such adjustments did not lead to even a short-term decline in growth. Large fiscal adjustments are thus possible in the ECCU countries and are indeed being undertaken—in Dominica, for instance. But their success depends on winning public support for them. Formulating economic policy in a transparent manner, for instance through town-hall meetings with the public, could help build support for difficult reforms. Venner said that such outreach was essential to preserve one of the strengths of the ECCU member states, their “liberal democratic systems

International Monetary Fund

St. Lucia, based on end-2001 data, would meet the ECCB’s proposed benchmark for debt-to-GDP (maximum ratio of 60 percent). 88. It is clear that rising deficits and debt levels pose a key risk to several ECCU member states. Furthermore, the risks of contagion that would result from the inability of one member to rollover its domestic or external debt obligations are high, given the linkage through the common currency and the ECCB. An episode of default in one country could undermine confidence in the currency, and call into question the sustainability of the