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Western Hemisphere > Dominica

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  • Type: Journal Issue x
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Cover IMF Working Papers
Fiscal Sustainability and Policy Issues in the Eastern Caribbean Currency Union
Mr. Anthony J. Pellechio
,
Saqib Rizavi
, and
Phebby Kufa
The fiscal position of the Eastern Caribbean Currency Union (ECCU) has deteriorated significantly in recent years, resulting in sharp increases in public debt. The sustainability of public debt is examined using the public sector budget constraint to derive the maximum public-debt-to-GDP ratio that can be sustained based on a country's projected steady-state primary balance, interest rate on public debt, and economic growth rate. In this context, government deficits and debt in several ECCU member countries appear unsustainable, posing a risk to the stability of the currency union. A critical issue facing member countries is to implement fiscal policies consistent with sustainable public finances and debt to underpin the currency union.
Keywords:
WP; government; country; government dissaving; member government; Fiscal Sustainability; Currency Union; ECCU member country authorities; procurement system; government securities market; government procurement; Fiscal stance; Monetary unions; Government debt management; West Africa; Caribbean; Global