BASSETERRE, St. Kitts – CRISIS-response measures implemented by the Eastern Caribbean Currency Union (ECCU) in 2009 will be crucial in keeping the region afloat in 2010, as further economic contraction is expected to hit the Caribbean’s vulnerable economies.
Two of the major policy initiatives undertaken by the region through the Eastern Caribbean Central Bank (ECCB) have been the establishment of the Eight Point Stabilization Programme and the signing of the Treaty of Basseterre to establish an economic union.
Together, the measures sought to deepen the process of collective action in response to the economic and financial crisis, while at the same time outline key institutional and fiscal reform strategies for a post-crisis era.
A 2.4% contraction is expected to befall the ECCU in 2010 and, according to ECCB Governor Sir K. Dwight Venner, the signing of these two initiatives gives a “solid and promising platform on which to approach the challenges of 2010”.
“These challenges are associated with the reality that the crisis will not be over for us, as it is projected that growth in the Currency Union will contract by a further 2.4 per cent in 2010.
“This is directly related to the lag in the transmission of economic impulses from our main trading partners to us. This lag is usually about 12 to 18 months and is associated, in this case, with the high level of unemployment in the United States and its impact on tourist arrivals, expenditure, and the flow of remittances,” Venner said last night (Jan. 29) during his 2009 ECCU Economic Review.
The lag, according to the top ECCB official, has had and will continue to have an impact on growth, government revenues and liquidity in the financial system. He reassured the public, however, that the region’s leaders and policymakers would remain “very vigilant” as fiscal constraints and high debt to GDP ratios continue to challenge the region.
The implementation of the Eight Point Stabilization Programme will be approached in two phases, said Sir Dwight, with 2010-2012 as a period of adjustment and 2013-2020 being a period of transformation.
Work has to be done now, he added, for adjustment and transformation to effectively take place.
“The year 2010 will be absolutely critical as the process has to begin now. The new Treaty must be ratified by all legislatures by June and will be the subject of intense public discussion and debate.
“The adjustment process has started and will be accelerated to maintain stability in the face of the continuing crisis and to lay the foundation for the future growth and transformation of the economies,” Venner said.
Partnership with member governments and regional and international development partners remains critical in the movement to stability and transformation of the ECCU.
