Eastern Caribbean Currency Union: Selected Issues

IMF Staff Country Reports, July 29, 2022

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Eastern Caribbean Currency Union: Selected Issues

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Bibliographic details

• Published: July 29, 2022
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400217272.002

Key findings on scarring from the pandemic

• The paper focuses on scarring effects of the pandemic on the Eastern Caribbean Currency Union’s (ECCU).
• Assessing the extent of the scarring effects is essential for the conduct of future economic policy in the ECCU.
• The significant output contraction would generate scarring effects in the ECCU countries.
• The degree of scarring could vary with countries’ economic structure and policy responses to the pandemic.
• A better understanding of the factors affecting the scarring effects and their fiscal implications could help inform discussions on policies needed to overcome them, especially for economies with limited economic diversification and high vulnerability to frequent shocks and natural disasters such as the ECCU countries.

Policy implications and recommended priorities

• ECCU countries need to balance difficult tradeoffs to mitigate scarring effects of the pandemic, other recent shocks, and limited fiscal policy space.
• Short-term priorities:
  • Continue health spending to cope with the pandemic.
  • Use effective social transfers to cope with rising living costs.
• Medium-term priorities:
  • Move from income support and job retention measures to adopting active labor market policies to facilitate the reallocation of workers and resources to their most productive uses.
  • Foster productivity growth through reallocation and active labor market measures.

Thematic coverage and context

• Subjects: Environment, Fiscal policy, Health, International organization, Monetary policy, Public debt.
• Keywords: B. output loss, Caribbean, COVID-19, difference in Debt-to-GDP projection, ECCU country, Fiscal rules, Fiscal stance, Global, Natural disasters, Real GDP loss, responsibility framework.
• The paper emphasizes policy choices for ECCU countries that have limited economic diversification and high vulnerability to frequent shocks and natural disasters.

Content in this bundle

• Eastern Caribbean Currency Union: Selected Issues; IMF Country Report No. 22/254; July 8, 2022
  • Eastern Caribbean Currency Union: Selected Issues; IMF Country Report No. 22/254; July 8, 2022 (Markdown version)
  • Eastern Caribbean Currency Union: Selected Issues; IMF Country Report No. 22/254; July 8, 2022 (PDF)