Eastern Caribbean Currency Union: Selected Issues
IMF Staff Country Reports, March 5, 2020
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- Canonical URL
- Eastern Caribbean Currency Union: Selected Issues
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Bibliographic details
- Published: March 5, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513536262.002
Summary
- Focuses on the need and importance of fiscal integration for the Eastern Caribbean Currency Union (ECCU).
- Argues that the continued success of the currency union can be solidified by greater fiscal policy integration.
- Notes that against the growing intensity of external shocks, country-level fiscal policies remain the most important policy lever.
- Posits that regional fiscal policy coordination could usefully supplement national policies in dealing with adverse shocks and potentially create fiscal and policy space along several dimensions.
- Observes that internationally, fiscal integration takes many forms depending on the interconnectedness of member economies and their willingness to give up fiscal autonomy.
- Concludes there is scope for tangibly improving tax incentives and rebalancing them toward those that are more effective, while using higher revenues to attract investment also through better infrastructure.
- States that regional coordination could significantly support and accelerate those processes.
Key findings and analysis
- External shocks to the ECCU are growing in intensity, increasing the importance of coordinated fiscal responses.
- Country-level fiscal policy remains the primary policy lever, but regional fiscal policy coordination could supplement national policies.
- Fiscal integration can create fiscal and policy space across multiple dimensions.
- There is scope to improve tax incentives and rebalance them toward more effective incentive structures.
- Higher revenues could be used to attract investment, including through better infrastructure.
- Regional coordination is highlighted as a mechanism to support and accelerate tax and investment reforms.
Policy recommendations and implications
- Pursue greater fiscal policy integration within the ECCU to solidify the currency union’s resilience.
- Use regional fiscal policy coordination to supplement national fiscal measures when responding to adverse external shocks.
- Rebalance and improve tax incentives, prioritizing those that are demonstrably more effective.
- Channel higher revenues toward measures that attract investment, including infrastructure improvements.
- Recognize that the form and depth of fiscal integration will depend on member countries’ interconnectedness and willingness to cede fiscal autonomy.
Publication and metadata
- Publication title: Eastern Caribbean Currency Union: Selected Issues
- Publication date: March 5, 2020
- Pages: 53
- Volume: 2020
- Issue: 071
- Series: Country Report No. 2020/071
- DOI: https://doi.org/10.5089/9781513536262.002
- Stock No: 1ECCEA2020002
- ISBN: 9781513536262
- ISSN: 1934-7685
- Subjects: Central Bank digital currencies, Digital currencies, Fiscal policy, Public investment spending, Tax incentives
- Keywords: CR, deposit, digital currency, ECCU country, ISCR, transaction
International Monetary Fund. Western Hemisphere Dept. "Eastern Caribbean Currency Union: Selected Issues", IMF Staff Country Reports 2020, 071 (2020).
Content in this bundle
- Eastern Caribbean Currency Union: Selected Issues; IMF Country Report No. 20/71; January 13, 2020