BASSETERRE, St. Kitts – THE sixth special meeting of the Eastern Caribbean Central Bank Monetary Council held last Thursday (Sept. 17) in St. Kitts brought to an end almost two weeks of adjusting the region’s strategic economic response to the global financial crisis.
A number of economic policymaking teams from across the Eastern Caribbean Currency Union (ECCU) met in St. Kitts from September 7-16 for a ‘Boot Camp’ on economic and financial adjustments. The ten-day meeting focused on five points from the ECCU’s Stabilization and Growth Programme, and sought to formulate a new plan that obtained the three main objectives of stabilization, stimulus and structural reform.
The first five points addressed were suitably adapted financial programmes for each country, fiscal reform, debt management, public sector investment programmes (PSIPs) and social safety net programmes.
Following the meeting, the ECCB Monetary Council, which is comprised of regional finance ministers, met to discuss the financial programmes of each member country and outlined the best way forward.
Council agreed that the ECCU’s macroeconomic policymaking framework needs to be further strengthened through greater collaboration across ministries within the various countries and by better communication with the general public.
Stress was placed on institutionalizing the policymaking framework through the establishment or strengthening of units and departments, a move Council regards as urgently needed.
Fiscal reform was identified as a high-priority element. The finance ministers called for increased efforts to improve revenue collection and for the continued implementation of the Value Added Tax (VAT), as recommended by the Tax Commission. Throughout the meeting, there were similar calls to establish fiscal targets, improve procurement procedures and increase efforts to access concessional financing from development partners. Council addressed the establishment of an Expenditure Commission and the introduction of expenditure reduction programmes with a view to cut down on capital expenditure.
As it relates to debt management, the group of finance ministers agreed that the development of medium-term debt reduction strategies is critical, and that increasing the capacity of debt units to effectively manage each country’s debt portfolio remain a necessity. Greater use of the Regional Government Securities Market (RGSM) to assist governments in financing short and long-term expenditure was another key area of discussion among the region’s finance ministers.
According to Council, the development of well-structured PSIPs is critical in stimulating the ECCU economies. To this end, recommendations were made to clarify PSIPs within the framework of a medium-term development strategy, and to enhance institutional arrangements with line ministries and oversight committees. Council also recommended the recruitment of trained staff to deal with such matters.
Council concluded that there was great need for social mechanisms to mitigate the impact of the crisis on the poor and vulnerable within the region. Recommendations were made for greater coordination and collaboration among countries, and for the improved targeting of social protection programmes. Additionally, council agreed to the rationalization and consolidation of social protection programmes to improve efficiency and to establish priorities.
Member Countries are expected to adopt the recommendations and have already agreed to the constant updating of the financial programme for presentation to the Monetary Council on an ongoing basis.
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