IMF Staff Country Reports

Eastern Caribbean Currency Union: 2022 Article IV Consultation with Member Countries on Common Policies of the Eastern Caribbean Currency Union-Press Release; Staff Report; and Statement by the Executive Director for the Eastern Caribbean Currency Union

Publication Date:

July 29, 2022

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Summary:

This 2022 Article IV Consultation highlights that with Eastern Caribbean Currency Union economies slowly emerging from the pandemic with scars, the impact of the war in Ukraine is a setback to the nascent recovery. Higher food and energy prices, amid ongoing supply disruptions and intra-regional transportation bottlenecks, are raising inflation, eroding income, lowering output growth, worsening fiscal and external positions, and threatening food and energy security. The financial system has remained broadly stable so far, with adequate capital and liquidity buffers, but nonperforming loans remain high and could rise further following the expiration of the Eastern Caribbean Central Bank’s loan moratoria program. The outlook is subject to large downside risks, primarily from further increases in commodity prices and new coronavirus disease variants amid vaccine hesitancy, in addition to the ever-present threat of natural disasters. The report recommends that maintaining fiscal prudence while protecting the vulnerable through health spending and temporary targeted transfers and enhanced social safety nets to cope with rising living costs. Adopting well-designed rule-based fiscal frameworks would help achieve fiscal consolidation, enhance resilience to shocks such as natural disasters, and preserve the credibility of the regional debt target.

Series:

Country Report No. 2022/253

Subject:

Environment Financial institutions Fiscal policy Health International organization Monetary policy Public debt

Frequency:

regular