Eastern Caribbean Currency Union: 2019 Discussion on Common Policies of Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the Eastern Caribbean Currency Union
IMF Staff Country Reports, March 5, 2020
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- Eastern Caribbean Currency Union: 2019 Discussion on Common Policies of Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the Eastern Caribbean Currency Union
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Bibliographic details
- Published: March 5, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513536224.002
Summary findings
- ECCU’s gross domestic product (GDP) growth accelerated from 3/4 percent in 2017 to 3 3/4 percent in 2018.
- The 2018 acceleration reflected buoyancy in the tourism sector, sizable Citizenship-by-Investment (CBI) inflows, and a recovery from the 2017 hurricanes in Anguilla and Dominica, supported by large public investments in reconstruction.
- Fiscal deficits increased in 2018–2019, but they have remained moderate.
- External imbalances are sizable.
- 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.
Macroeconomic outlook and projections
- Short-term drivers: tourism buoyancy and sizable CBI inflows supported above-trend growth in 2018.
- Medium-term projection: gradual moderation of growth toward a long-term average of 2 1/4 percent as cyclical momentum normalizes and CBI inflows ease.
- Risks: intensification of natural disasters; financial sector weaknesses.
Fiscal developments and tax policy
- Fiscal deficits increased in 2018–2019, though they remained moderate.
- Policy emphasis: efforts are needed to streamline, and re-balance tax incentives based on clear principles consistent with international best practices.
External position and financial sector vulnerabilities
- External imbalances are described as sizable.
- Financial sector: significant vulnerabilities affect both banks and non-banks, posing downside risks to the outlook.
Policy implications and recommendations
- Streamline and re-balance tax incentives guided by clear principles and international best practices to support fiscal sustainability.
- Address financial sector vulnerabilities across banks and non-banks to reduce downside risk to growth and public finances.
- Strengthen disaster risk mitigation and preparedness given the risk of natural disasters that could materially alter the outlook.
Publication metadata (selected)
- Pages: 79
- Volume: 2020
- Issue: 070
- Series: Country Report No. 2020/070
- DOI: https://doi.org/10.5089/9781513536224.002
- ISBN: 9781513536224
- ISSN: 1934-7685
Eastern Caribbean Currency Union: 2019 Discussion on Common Policies of Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the Eastern Caribbean Currency Union
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