BASSETERRE, ST. KITTS (MARCH 2ND 2004) – The Eastern Caribbean Central Bank (ECCB) is reporting an improvement in the economies in the Eastern Caribbean Currency Union (ECCU).
The Bank’s Governor, Sir K. Dwight Venner in reviewing the economic developments and prospects in the ECCU member countries, noted that the positive influence of the economic recovery in North America and a number of European countries on growth in the ECCU was reflected in the improvement in the tourism sector.
“Accordingly, growth in real output experienced in the ECCU in 2003, was 2.4 percent, up from 0.2 percent, in 2002, with projected growth of 3.3 percent for 2004. Council was heartened by the increasing trend projected,” said a communiqué issued at the end of the 50th Meeting of the Monetary Council.
It said that the pound sterling and the euro, two currencies in which the ECCU transacted significant business, had strengthened against the US dollar, and in tandem, against the EC dollar in 2003.
“These currency movements had both positive and negative effects. Tourism and export commodities were positively affected, while debt service payments denominated in pound sterling and the euro increased as more EC dollars were required to meet those obligations,” the statement added.
The ECCB Monetary Council also noted the improvements in the fiscal performance of the ECCU member governments demonstrated by the narrowing of the consolidated fiscal deficit. This narrowing reflected the efforts made under the structural adjustment programmes being pursued by the ECCU member governments. Council said it has encouraged member governments to maintain fiscal discipline.
The Council also received the report on the results of the Financial Sector Assessment Programme (FSAP), which was conducted by the International Monetary Fund (IMF) and the World Bank.
The Council agreed to the Bank’s recommendations to strengthen the regulation and supervision of financial institutions in order to guard against potential sources of financial instability.
It also agreed to recommend to ECCU member governments, the early implementation of the Integrated Regulatory Framework, which would provide for the establishment of a Single Regulatory Unit in each member territory to regulate and supervise financial institutions not licensed under the Banking Act.
The Council also noted that the Regional Government Securities Market (RGSM) had been instrumental in reducing the interest rates for ECCU member governments thereby lowering the cost of borrowing.
The Monetary Council noted that ECCU member countries were taking steps to implement the procedures to ensure the operational efficiency of the RGSM and agreed that the member governments should be encouraged to review their practices, so as to ensure that the RGSM became fully operational.
The Monetary Council discussed and agreed to pursue efforts to position the Eastern Caribbean Securities Exchange as a CARICOM-wide exchange and called upon the members to facilitate the necessary legislative changes in support of this arrangement.
The Council also discussed the liquidity in the banking system and noted the decline in the Inter Bank and Treasury Bill interest rates, but agreed that no change be made to the regulated minimum rate on interest on saving deposits, currently 3.0 percent and the Central Bank’s discount rate, currently 6.5 percent.
The Monetary Council paid tribute to the late Prime Minister of Dominica, the Hon. Pierre Charles, for his unwavering commitment and sterling service to the people of Dominica and the region.
It applauded the determination of his successor, the Honourable Roosevelt Skerritt, to continue the adjustment and reform process under the structural adjustment programme, and pledged to continue to give support to the efforts of the Government and people of Dominica.
