Monetary Council hopes for soft recessionary impact
By Terresa McCall
Reporter-SKNVibes.com
~~Adz:Left~~BASSETERRE, St. Kitts - WHILE the International Monetary Fund (IMF) has issued a warning to the Caribbean to fortify itself against the impact of a possible recession in the US economy, Heads of the Eastern Caribbean States are expressing optimism that should a recession occur, the impact on the region would not be far-reaching.
According to a report carried on BBC Caribbean yesterday, Deputy Managing Director of the IMF, Murilo Portugal expressed that “a recession in the United States would almost certainly have a significant impact on Caribbean economies.”
During a press briefing last Friday, when asked about implemented measures to cushion the impact of a possible recession in the US economy, members of the Eastern Caribbean Central Bank (ECCB) explained that they are “all still very optimistic that what is happening in the global economy and in particular, in the US economy will not have a significant impact on us in the ECCU…”
“…in other words, (it) would not put us into any significant recessionary period, and we feel that way because today the policy tools available to the US and all the economies is far advanced to what it is was before. So we do not expect, and we should hope that the US Economy, if it goes into any recession, that the recession would not be long-lived and therefore the impact on us, we’re hoping, will be minimal,” Minister of Finance in the government of Antigua and Barbuda, Errol Cort expressed.
Weighing in on the issue, Nigel Carty, Junior Minister in the St. Kitts Nevis government with responsibility for Finance, said notwithstanding that the EC dollar is pegged to the US dollar, no “significant effect” is expected as a result of the deflation of the US dollar.
“I think it’s important to recognise that although our currency is tied to the US currency, we do not expect any significant effect coming from the devaluation of the US currency because most of our imports are acquired from the US, and so there’s not a differential in terms of the rate between the US currency and the Eastern Caribbean currency. But I think it’s fair to say in respect of imports that we would have to get outside of the US region, we are going to attract some prices which are going to be definitely higher as we go forward.”
The Junior Minister also spoke of a stimulus package that the US government wants to establish to offset a likely recession, but hopes the region would not be too heavily impacted should recession be a reality.
“I want to make a point as well in relation to what people are considering to be the imminent recession in the US economy. I think we are all aware that the US government is trying to bring some stimulus package to offset what is likely to be a recession. I think it is clear that even though some are speculating that the stimulus might not be enough, I think it’s fair to say that we’re hoping that the recession would not be as deep and…we are just hoping that we would not be too heavily impacted by this recession if it occurs at all.”
Governor of the ECCB, Sir K. Dwight Venner, explained that there are measures being employed by the governments of the ECCU, “…fiscal restraint, managing the debt…” but further noted that the cushioning exercise must not be purely a government exercise, but rather the entire populace.
Chairman of the ECCB Monetary Council and Anguilla’s Minister of Finance Victor Banks promised that the situation would be monitored as time progresses and, if need be, mitigating measures would be implemented.
“The most I can say is that we are keeping a watching brief on the situation, and, as we go along, we’ll develop policy measures which we hope can deal with the situation. What we’re doing now is taking into account what is happening now and trying to put mitigating measures against the impacts. We’ll have to continue doing that kind of research and analysis as we move forward.”
