public and to maintain the stability of the financial system. In this context, the experience from the BAICO and CLICO debacle helped to reduce the potential resistance from some parts of the credit union sector on the need to strengthen regulation and supervision. This has, in part, accelerated the passage of the harmonized creditunionlegislation in Dominica and Grenada where the credit union sector played a substantial role in the financial system.
14. The new cooperative societies legislation aim to tighten the activities of credit unions through enhancing
International Monetary Fund. Western Hemisphere Dept.
high NPLs and low capitalization, should also be addressed. In particular, the authorities need to move quickly to strengthen supervision and regulatory powers of the FSU and to move ahead with the regional creditunionlegislation that has been pending for some time. Credit by public financial institutions should be better targeted to address missing or incomplete credit markets, in line with national development objectives. The initiative to establish a credit bureau is welcome, which should facilitate access to credit. Furthermore, a review of the legislation
Fund and the Bank for technical assistance to support ongoing efforts.
Key Recommendations 2
I. Cross-Sectoral Issues
Enact amendments to the FIA, IA, and SIA with a minimum of further delay.
Consider an insolvency law that incorporates a procedure for the reorganization or administration of insolvent companies.
Finalize the drafting of new creditunionlegislation.
Regulatory and supervisory issues
Mrs. Sarwat Jahan, Jayendu De, Mr. Fazurin Jamaludin, Piyaporn Sodsriwiboon, and Cormac Sullivan
success of the National Financial Inclusion and Financial Literacy Strategy (2014–15) strategy, a second strategy was launched in 2016 to promote financial inclusion through shared public and private sector goals (IMF Country Report No. 15/319). Access to mobile services has been expanding and the newly implemented KATS system represents substantial progress in payment system development and efficiency. 10 The new creditunionlegislation will help to modernize the small but crucial sector, but still needs supporting regulations and guidelines. The authorities have
establishing a one-stop shop for investors. Also, to promote a better allocation of capital and strengthen oversight and resilience of the financial sector, the authorities will establish the Single Regulatory Unit and seek passage of creditunionlegislation. 6 Both pieces of legislation have been approved by Cabinet
V. A ccess and C apacity to R epay
17. The authorities have requested fund financing in an amount equivalent to 35 percent of quota in total, SDR 5.36 million (25 percent of quota) under the Rapid Credit Facility, supplemented by the Emergency
harmonized insurance act for the ECCU jurisdictions. CARTAC, with the assistance of the Legal Department of the Fund (LEG), has completed a new Money Services Business Act for the ECCU jurisdictions. It now rests with jurisdictions for enactment. The offshore insurance legislation is being upgraded for St. Lucia and for St. Vincent and the Grenadines. Upgrades to the legislative framework for credit unions have been undertaken. A model creditunionlegislation is being finalized. In an effort to gauge the level of activity and risks in the operations of credit unions and
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.
St. Lucia faces significant policy challenges in the aftermath of Hurricane Tomas. It is experiencing an urgent balance of payments need that would result in a severe economic disruption. The government is focused on achieving medium-term debt sustainability. The policies outlined tackle urgent rebuilding needs and appropriately aim to maintain macroeconomic stability. Executive Directors support the request for funds based on the extent of the damage caused, the associated urgent balance of payments need, and the government’s commitment to limit the increase in capital spending.
International Monetary Fund. Western Hemisphere Dept.
requirements, a more effective resolution of failed banks, and a stronger depositor protection. A prompt implementation of the remaining elements of the regional strategy for bank resolution is however needed. In particular, the legislation on the Eastern Caribbean Asset Management Corporation would allow banks to dispose of delinquent loans and return to normal operations more quickly. This step should be complemented by the swift finalization of new foreclosure and insolvency regulation and the adoption of the regionally harmonized creditunionlegislation. Further steps
bank (with nonperforming loans at 30-35 percent) and by its recent rapid credit expansion, which will expose it to further credit risk. 11
17. Policies to ensure financial stability . Staff welcomed the authorities’ increased efforts in the nonbanking system, including passage of the legal framework for the regulation and supervision of nonbanks, of supplementary creditunionlegislation and drafting of the insurance legislation, as well as strengthening of the Financial Services Unit, the agency responsible for the supervision of nonbanks. At the same time, staff