Eastern Caribbean Currency Union
Eastern Caribbean Currency Union

Author: International Monetary Fund. Western Hemisphere Dept.

Publisher: International Monetary Fund

Published: 2017-06-14

Total Pages: 21

ISBN-13: 1484303385

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This Selected Issues paper analyzes productivity in the Eastern Caribbean Currency Union by exploring two complementary exercises. It computes total factor productivity by extending standard growth accounting frameworks with (1) the impact of natural disasters on the stock and productivity of physical capital; (2) human capital accumulation; and (3) the impact of out-migration on labor and human capital. The paper also analyzes labor productivity, including across economic sectors. The results indicate that the historical deceleration in growth was driven mostly by the declining contribution of total factor productivity, which resulted in stagnation in the aftermath of the global financial crisis. Labor productivity measures show that labor is largely allocated in the sectors with relatively lower productivity.

Fiscal Sustainability and Policy Issues in the Eastern Caribbean Currency Union
Fiscal Sustainability and Policy Issues in the Eastern Caribbean Currency Union

Author: Phebby Kufa

Publisher: International Monetary Fund

Published: 2003-08-01

Total Pages: 36

ISBN-13: 1451857896

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The fiscal position of the Eastern Caribbean Currency Union (ECCU) has deteriorated significantly in recent years, resulting in sharp increases in public debt. The sustainability of public debt is examined using the public sector budget constraint to derive the maximum public-debt-to-GDP ratio that can be sustained based on a country's projected steady-state primary balance, interest rate on public debt, and economic growth rate. In this context, government deficits and debt in several ECCU member countries appear unsustainable, posing a risk to the stability of the currency union. A critical issue facing member countries is to implement fiscal policies consistent with sustainable public finances and debt to underpin the currency union.

Eastern Caribbean Currency Union
Eastern Caribbean Currency Union

Author: International Monetary Fund. Western Hemisphere Dept.

Publisher: International Monetary Fund

Published: 2019-02-22

Total Pages: 67

ISBN-13: 1498300103

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This Selected Issues paper presents a quantification of the long-term benefits of ex-ante resilient investment and insurance needs against natural disasters (ND) in Eastern Caribbean Currency Union (ECCU). Cost-benefit analysis of resilient investment based on a dynamic stochastic general equilibrium model tailored to small states and calibrated to all ECCU economies is also discussed in the paper. The model’s aggregate production function illustrates the interaction among the participating sectors and their contribution to output, ultimately informing the role of resilient investment. The study also quantifies government insurance coverage needs and costs using an empirical stochastic model that simulates NDs fiscal costs. The insurance needs are framed within the World Bank insurance layering framework. The results in this paper underscore the importance of a shift from ex-post recovery to a focus on ex-ante resilience building. Ex-ante resilient investment and insurance are key to the welfare and financial sustainability of the ECCU, given high intensity and recurrence of NDs.

Fiscal Sustainability and Policy Issues in the Eastern Caribbean Currency Union
Fiscal Sustainability and Policy Issues in the Eastern Caribbean Currency Union

Author: Phebby Kufa

Publisher:

Published: 2006

Total Pages: 35

ISBN-13:

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The fiscal position of the Eastern Caribbean Currency Union (ECCU) has deteriorated significantly in recent years, resulting in sharp increases in public debt. The sustainability of public debt is examined using the public sector budget constraint to derive the maximum public-debt-to-GDP ratio that can be sustained based on a country's projected steady-state primary balance, interest rate on public debt, and economic growth rate. In this context, government deficits and debt in several ECCU member countries appear unsustainable, posing a risk to the stability of the currency union. A critical issue facing member countries is to implement fiscal policies consistent with sustainable public finances and debt to underpin the currency union.

Eastern Caribbean Currency Union
Eastern Caribbean Currency Union

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2012-06-08

Total Pages: 43

ISBN-13: 1475547749

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The Eastern Caribbean Currency Union (ECCU) has made significant progress in improving the quality and quantity of the macroeconomic statistics it produces and disseminates to the public. The Selected Issues Paper discusses prospects and challenges for credit unions in the ECCU. It reviews the current state of macroeconomic statistics, outlines progress that has been made, and identifies outstanding challenges. It also describes technical assistance to the region and presents the challenges for the production of macroeconomic statistics in small island states.

Eastern Caribbean Currency Union: 2021 Discussion on Common Policies of Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the Eastern Caribbean Currency Union
Eastern Caribbean Currency Union: 2021 Discussion on Common Policies of Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the Eastern Caribbean Currency Union

Author: International Monetary

Publisher: International Monetary Fund

Published: 2021-05-04

Total Pages: 84

ISBN-13: 151357292X

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The fallout from the COVID-19 crisis is hitting ECCU economies hard. Tourism receipts (accounting for nearly 40 percent of GDP) have dried up, as tourist arrivals have come to a grinding halt. The authorities successfully contained the spread of the virus at the onset of the pandemic by largely closing the borders, but a reopening of the economies since the summer has led to a surge in COVID cases. The ECCU economy is projected to contract by 16 percent in 2020 and by a further near 1⁄2 percent in 2021. Fiscal positions have deteriorated sharply, and public debt is projected to reach near 90 percent of GDP in 2021 and remain at an elevated level for years to come. Headline indicators suggest the financial system is relatively sound with ample liquidity buffers, but nonperforming loans are expected to rise significantly. The outlook is clouded by exceptionally high risks, including from the uncertainty concerning the evolution of the pandemic.

Riding the Storm: Fiscal Sustainability in the Caribbean
Riding the Storm: Fiscal Sustainability in the Caribbean

Author: Mr.Serhan Cevik

Publisher: International Monetary Fund

Published: 2020-01-31

Total Pages: 19

ISBN-13: 1513526367

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Fiscal sustainability remains a paramount challenge for small economies with high debt and greater vulnerability to climate change. This paper applies the model-based sustainability test for fiscal policy in a panel of 16 Caribbean countries during the period 1980–2018. The results indicate that the coefficient on lagged government debt is positive and statistically significant, implying that fiscal policy in the Caribbean takes corrective actions to counteract an increase in the debt-to-GDP ratio. Nonlinear estimations, however, show that the quadratic debt parameter is negative, which indicates that fiscal policy response is not adequate to ensure sustainability at higher levels of debt. We also find that the fiscal stance tends to be countercyclical on average during the sample period. These empirical results confirm that maintaining prudent fiscal policies and implementing growth-enhancing structural reforms are necessary to build fiscal buffers and ensure debt sustainability with high probability even when negative shocks occur over the long term.

Eastern Caribbean Currency Union
Eastern Caribbean Currency Union

Author: International Monetary Fund. Western Hemisphere Dept.

Publisher: International Monetary Fund

Published: 2020-03-05

Total Pages: 79

ISBN-13: 1513536222

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This paper presents IMF’s 2019 Discussion on Common Policies of Member Countries of the Eastern Caribbean Currency Union (ECCU). ECCU’s gross domestic product (GDP) growth accelerated from 3/4 percent in 2017 to 3 3/4 percent in 2018, reflecting buoyancy in the tourism sector, sizable Citizenship-by-Investment (CBI) inflows, and a recovery from the 2017 hurricanes in Anguilla and Dominica, which were supported by large public investments in reconstruction. Fiscal deficits increased in 2018–2019, but they have remained moderate. Efforts are needed to streamline, and re-balance tax incentives based on clear principles consistent with international best practices. External imbalances are sizable and significant financial sector vulnerabilities affect both banks and non-banks. Growth is projected to gradually moderate toward its long-term average of 2 1/4 percent as the cyclical momentum normalizes and CBI inflows ease. These trends would also contribute to wider fiscal deficits, ending the downward drift in public debt dynamics. The outlook is clouded by downside risks, including a possible intensification of natural disasters and financial sector weaknesses.

The Eastern Caribbean Economic and Currency Union
The Eastern Caribbean Economic and Currency Union

Author: Mr.Alfred Schipke

Publisher: International Monetary Fund

Published: 2013-04-10

Total Pages: 546

ISBN-13: 1616352655

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The Eastern Caribbean Economic and Currency Union (OECS/ECCU) is one of four currency unions in the world. As in other parts of the world in the aftermath of the global economic and financial crisis, the region is at a crossroads, facing the major challenges of creating jobs, making growth more inclusive, reforming the banking system, and managing volatility, while grappling with high public debt and persistent low economic growth. Policymakers have the critical task of implementing strong reforms to strengthen the monetary union while also laying the foundation for accelerating growth. This Handbook provides a comprehensive analysis of the key issues in the OECS/ECCU, including its organization and economic and financial sector linkages, and provides policy recommendations to foster economic growth.

Eastern Caribbean Currency Union
Eastern Caribbean Currency Union

Author: International Monetary Fund. Western Hemisphere Dept.

Publisher: International Monetary Fund

Published: 2024-04-25

Total Pages: 85

ISBN-13:

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After successive external shocks—first, the pandemic and later higher commodity prices after Russia’s invasion of Ukraine—the region’s output has surpassed its pre-pandemic level boosted by a strong tourism rebound and investment. Inflation is moderating from its peak. Fiscal and external balances have improved, but public debt and current account deficits remain high. The financial system has been stable and liquid, although it continues to be confronted with asset quality weaknesses and rising risks in the non-bank financial sector. Longstanding structural challenges affecting private investment and employment create a drag on growth going forward. The region’s outlook is heavily dependent on uncertain Citizenshipby- Investment (CBI) inflows, and susceptible to volatility in commodity prices, a slowdown in major tourism source countries, and the recurrent threat of natural disasters.