Monetary Council predicts favourable continued economic expansion
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| Chairman of the Monetary Council, Amguilla's Minister of Finance, Hon. Victor Banks |
BASSETERRE, ST. KTTTS, OCTOBER 19TH 2007 (CUOPM) – The Monetary Council of the Eastern Caribbean Central Bank (EECB) says the monetary and credit conditions in the currency union member states are expected to remain generally favourable for continued economic expansion in the rest of 2007.
“However, relative to 2006, the pace of economic expansion is projected to be moderate, based on a slower pace of growth in construction activity following the completion of Cricket World Cup (CWC) 2007 related projects, and a likely decline in agricultural production resulting from damage to crops in Dominica and St. Lucia by Hurricane Dean,” said the Council in a communiqué following its 60th Meeting under the Chairmanship of Anguilla’s Minister of Finance, Hon. Victor Banks
The Council, comprised of Ministers of Finance from the organisation of Eastern Caribean States (OECS) noted that the expected slowdown in the United States economy is likely to adversely affect the performance of the tourism industry, as stay-over visitors from that market are projected to decline.
“However, the decline is likely to be tempered by an increase in stay-over arrivals from Europe as they take advantage of an improvement in their purchasing power,” said the communiqué.
The Council, in light of the recent monetary and credit conditions, and the projected developments in these conditions and economic activity over the short term, has agreed to maintain the Central Bank’s administered interest rates as follows: (1) The minimum rate of interest on savings deposits at 3.0 percent and (2) The Central Bank’s discount rate at 6.5 percent.~~Adz:Right~~
It said the Council supported the view that a credible fixed exchange rate regime and a stable financial system were necessary for continued favourable monetary and credit conditions which were considered to be prerequisites for sustainable output expansion.
The Council also noted that the continued credibility of the exchange rate peg depended on a sufficiency of foreign assets to support the currency’s external value as well as a supportive fiscal policy stance. Council therefore agreed that over the medium term, decisive reductions in fiscal deficits were desirable.
It also approved the content of the Legislative Drafting Manual which was compiled to facilitate the drafting of uniform financial legislation throughout the Eastern Caribbean Currency Union and noted the status of legislation in member countries with regard to The Money Services Business Bill; The Payment Systems Bill and Bills of Exchange (Amendment) Bill; The Insurance Bill; Outstanding Securities Legislation and The Banking (Capital Adequacy and Capital Ratios) Regulations. It also agreed to encourage member governments to facilitate the speedy passage of the outstanding legislation.
Council discussed the growth of the co-operative credit unions in the currency union and agreed that there was a need for strong harmonised legislation to facilitate the regulation of the operations of these institutions.
