A valuable, forward-looking Report…
1. This Staff Report marks a watershed. It does not lack criticisms. But a focus on the region’s opportunities and strengths, and on identifying how to exploit these for the region’s betterment, is at its core . My ECCU-region authorities deeply appreciate this focus. They thank the staff for their hard work and analytical insights. They offer their fullest cooperation in building upon this positive effort going forward. They hope – and expect – that a broadening and deepening of the kinds of analyses undertaken for this
On September 27, 2010, the Executive Board of the International Monetary Fund (IMF) concluded the 2010 Discussion on Common Policies of Member Countries of the Eastern Caribbean Currency Union (ECCU). 1
The ECCUregion has been hard hit by the global economic downturn and is faced with a protracted recovery. Real regional Gross Domestic Product (GDP) contracted by 6 percent in 2009, reflecting a collapse in tourist arrivals and Foreign Direct Investment (FDI) financed construction activity. Continued weakness in private consumption and
a hurricane of any category in a given year is about 18 percent for the ECCUregion . For each of the ECCU countries, Figure 1 shows the probable maximum loss from hurricanes for return periods of one in 18, 20, 30, 50, 100, 200, 250 and 500 years, respectively, as estimated by the World Bank (2006) . 4 5 As summarized in Table 3 , historical data would imply that Dominica is the most vulnerable while Grenada is the least affected by hurricanes among the ECCU countries. 6 The estimated fiscal loss caused by a hurricane with a return period of 1-in-30
declined as a result of preference erosion and hurricane damage. A dip in gross international reserves of the ECCB in 2005 was more than reversed by mid–2006, with the coverage of monetary demand liabilities at over 96 percent—well above the legally mandated floor of 60 percent.
The ECCUregion joined the CARICOM Single Market (CSM) in June 2006. At the same time the framework for integration within the Organization of Eastern Caribbean States (OECS) is being revisited in the context of discussions on a revised OECS Economic Union Treaty.
International Monetary Fund. Western Hemisphere Dept.
This 2018 discussion on common policies of the Eastern Caribbean Currency Union (ECCU) highlights that the member countries are gradually recovering following the catastrophic impact of Hurricanes Irma and Maria in 2017. Conditions remain favorable to growth, however, risks are increasing. The fiscal balance for the region as a whole worsened in 2017, reflecting lower inflows from citizenship-by-investment programs and higher reconstruction and current spending. The IMF team made several policy recommendations including shifting focus from the current emphasis on recovery from natural disasters to building ex-ante resilience. The report also recommends intensifying decisive and timely actions to resolve weaknesses in the financial sector, including longstanding problems in the banking sector and emerging risks in the non-banking sector. The authorities expressed commitment to the acceleration of key reforms to upgrade and strengthen the financial sector regional oversight framework. In addition to fiscal consolidation, injecting new vigor into the structural policy agenda will help enhance competitiveness and make growth more inclusive.