Front Matter Page
IMF Country Report No. 17/150
EASTERN CARIBBEAN CURRENCY UNION
2017 DISCUSSION ON COMMON POLICIES OF MEMBER COUNTRIES—PRESS RELEASE AND STAFF REPORT
June 2017
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2017 Discussion on Common Policies of Member Countries, the following documents have been released and are included in this package:
A Press Release summarizing the views of the Executive Board as expressed during its June 2, 2017.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on June 2, 2017, following discussions that ended on April 13, 2017, with the officials of Member Countries of the Eastern Caribbean Currency Union on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on May 18, 2017.
An Informational Annex prepared by the IMF staff.
The documents listed below have been or will be separately released.
Selected Issues
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
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© 2017 International Monetary Fund
Front Matter Page
EASTERN CARIBBEAN CURRENCY UNION
STAFF REPORT FOR THE 2017 DISCUSSION ON COMMON POLICIES OF MEMBER COUNTRIES
May 18, 2017
Under Article IV of the IMF’s Articles of Agreements, the IMF holds bilateral consultations with members, usually every year. In the context of the 2017 ECCU Common Policies Discussion, the mission held policy discussions with the Governor of the Eastern Caribbean Central Bank (ECCB), senior officials of the Caribbean Development Bank (CDB) and of the Organization of Eastern Caribbean States (OECS), financial sector regulators, and representatives of the private sectors.
Key Issues
Favorable external conditions continue to support economic recovery, but flat tourism receipts and falling revenues from citizenship programs have weakened growth. Fiscal vulnerability remains a concern, with most ECCU members not reaching the 2030 public debt target of 60 percent of GDP on current policies. Despite progress on financial sector reform, bank lending continues to decline. Risks are broadly balanced, but stronger fiscal and structural policies are needed to lower debt and address impediments to medium-term growth.
Main Policy Recommendations:
Addressing fiscal challenges: Adopt fiscal responsibility legislation to strengthen the commitment to the debt target; use, where possible, deposit cushions to lower debt; pro-actively manage the risk of natural disasters; increase regional coordination to reduce costs, preserve revenues, and contain reputational risks of citizenship programs.
Strengthening the financial sector: Complete implementation of the regional strategy, including by setting up the regional asset management company and strictly enforcing capital requirements; strengthen regulation and supervision and improve communications to secure correspondent banking relationships.
Structural Issues: Reduce fossil fuel dependence including to reduce energy costs; enhance the business climate; strengthen connectivity; tighten link between wages and productivity.
Approved By
Trevor Alleyne (WHD) and Bob Traa (SPR)
Mission: Discussions took place in Basseterre, Bridgetown, and Castries on April 4–13, 2017. The staff team comprised Leo Bonato (head), Alejandro Guerson, Alla Myrvoda, and Dominique Simard (all WHD). Trevor Alleyne (WHD) and Mike Sylvester (OED) participated in the discussions in Basseterre and Ann Marie Wickham (local economist, WHD) joined the team in Basseterre and Bridgetown. Annette De Kleine Feige (World Bank) accompanied the mission. Staff met with ECCB Governor Timothy Antoine, senior officials from the OECS Commission and the Caribbean Development Bank, financial system regulators, and representative of the financial sector.
Contributors: ECCU team (L. Bonato, A. Guerson, A. Myrvoda, D. Simard, H. Yun); F. Di Vittorio, D. Hess, G. Impavido, R. James, W. Mitchell, G. Salinas (all WHD), and D. Rivetti (MCM). S. Tibung and M. El Kawkabi prepared the document and provided administrative assistance.
Contents
Glossary
RECENT DEVELOPMENTS
OUTLOOK AND RISKS
POLICY DISCUSSIONS
A. Strengthening the Fiscal Policy Framework to Address Sustainability Challenges
B. Strengthening the Financial Sector
C. Enhancing Competitiveness and Boosting Potential Growth
STAFF APPRAISAL
BOXES
1. Potential Growth
2. Risk Assessment Matrix (RAM)
3. Fiscal Rules
4. The Consolidation of Indigenous Banks
FIGURES
1. Real Sector Developments
2. Tourism Developments
3. Monetary Developments
4. Financial Soundness Indicators
5. Doing Business Indicators
TABLES
1. Selected Economic and Financial Indicators, 2010–22
2. Selected Economic Indicators by Country, 2010–22
3. Selected Central Government Fiscal Indicators by Country, 2010–22
4. Selected Public Sector Debt Indicators by Country, 2010–22
5. Monetary Survey, 2010–18
6. Summary Balance of Payments, 2010–22
7. Selected Labor Market Indicators
ANNEXES
I. Implementation of Previous Staff Advice
II. Citizenship-By-Investment Programs
III. Central Government Wage Bills
IV. Public Investment Management
V. The Regional Government Securities’ Market
VI. External Sector Assessment
VII. United Kingdom Overseas Territories–Anguilla and Monstserrat
Glossary
| AML/CFT |
Anti-Money Laundering and Combating the Financing of Terrorism |
| BPM6 |
Balance of Payments Manual 6 |
| CARTAC |
Caribbean Technical Assistance Centre |
| CBI |
Citizenship-By-Investment |
| CBRs |
Correspondent banking relationships |
| CDB |
Caribbean Development Bank |
| ECAMC |
Eastern Caribbean Asset Management Corporation |
| ECCB |
Eastern Caribbean Central Bank |
| ECCU |
Eastern Caribbean Currency Union |
| EDF |
European Development Fund |
| FATF |
Financial Action Task Force |
| FDI |
Foreign Direct Investment |
| FRL |
Fiscal Responsibility Legislation |
| KYC |
Know Your Customer |
| MSR |
Minimum Savings Deposit Rate |
| NPLs |
Non-performing loans |
| NTF |
National Transformation Fund |
| OECS |
Organization of Eastern Caribbean States |
| PFM |
Public Finance Management |
| REER |
Real Effective Exchange Rate |
| RGSM |
Regional Government Securities Market |
Front Matter Page
EASTERN CARIBBEAN CURRENCY UNION
STAFF REPORT FOR THE 2017 DISCUSSION ON COMMON POLICIES OF MEMBER COUNTRIES—INFORMATIONAL ANNEX
May 18, 2017
Prepared By
The Western Hemisphere Department (In consultation with other departments)
Contents
RELATIONS WITH THE FUND
CARTAC: CAPACITY BUILDING IN THE ECCU
Front Matter Page
Press Release No. 17/222
FOR IMMEDIATE RELEASE
June 14, 2017
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