ECCB Governor sees more challenges for ECCU ahead

Governor of the Eastern Caribbean Central Bank (ECCB), Sir Dwight Venner, in his annual report predicted that the Eastern Caribbean Currency Union (ECCU) will continue to face tremendous challenges over the next few years.{{more}}

In a regional broadcast aired in the eight ECCB member countries on Tuesday, June 29, 2010, Sir Dwight warned that the current global financial crisis is not over.

Within the region, Sir Dwight stated: “Government revenues have decreased and there has been a fall in employment and an increase in poverty levels in member countries.”

He disclosed that the ECCB is projecting a decline in economic activity across the region of approximately 2.4 per cent during this year.

His report assessed the bank’s performance for the financial year which ended March 31, 2010. He also gave an update on measures the bank has undertaken to ensure the safety and soundness of the region’s financial system.

Sir Dwight’s address also highlighted the policies and programmes the bank, in collaboration with its member governments, has put in place to enhance the monitoring and regulation of the commercial banks and to strengthen the regulatory framework governing the operations of the non-bank sector.

The Governor’s report examined the economic challenges facing the (ECCU) and the way forward for transforming the region’s economies and improving the standard of living of ECCU citizens.

With regard to the international financial situation, Sir Dwight stated that the outlook is uncertain because the advanced countries are not completely out of the recession and are experiencing extremely high and unprecedented levels of fiscal deficits and debt.

“There is another issue emanating from the international community which will become a significant matter for the currency union, namely the decline and possible cessation of foreign aid. As I said earlier, the advanced countries are experiencing major fiscal and debt problems and high levels of unemployment, and it will, therefore, become both fiscally and politically difficult for the currency union to attract sizeable amounts of aid,” said Sir Dwight, adding that the region will find it virtually impossible to attract aid flows in competition with Sub-Saharan Africa and Haiti.

Sir Dwight disclosed that during the year, the bank was able to achieve a net income of $37 million. He remarked that due to stringent cost-cutting which was implemented, there was a decrease in the bank’s expenditure of $6.2 million.

He noted at the end of the financial year, the bank’s total assets amounted to $2.5 billion, an increase of 8.1 per cent over the previous year. Sir Dwight attributed this increase to an expansion in the bank’s foreign reserves.

During his address Sir Dwight outlined an eight point stabilization programme for sustaining growth and development in the region. The components were identified as: Financial Programming, Fiscal Reform, Debt Management, Public Sector Investment Programmes, Social Safety Net Programmes, Stability, Regulation and Development of the Financial System so that it can function effectively as an intermediary and provide access to financial resources for growth projects.