Press Release No. <a name="P16_49"></a> 05/77

The following statement was issued today in Antigua and Barbuda by an International Monetary Fund (IMF) staff mission to the Eastern Caribbean Currency Union (ECCU) countries:

"An IMF mission is visiting the Eastern Caribbean Currency Union countries to conduct the Fund's 2005 ECCU regional discussions. The mission is visiting six IMF member countries of the ECCU—Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines—and key regional institutions, including the Caribbean Development Bank, the Eastern Caribbean Central Bank (ECCB), and the Organization of Eastern Caribbean States (OECS). In this context, the IMF mission is visiting Antigua and Barbuda during April 7-8, 2005."

"The regional discussions focus on the economic prospects, opportunities, and challenges facing the ECCU and are intended to complement and strengthen the bilateral Article IV consultation discussions that the IMF holds with the individual ECCU member countries. A concluding statement that outlines the policy recommendations will be presented at end-April for consideration by the member countries of the ECCU. Subsequently, a report reflecting the IMF mission's policy discussions with the authorities will be prepared and presented to the 24-member Executive Board of the IMF."

"Despite an active hurricane season, economic activity remained robust in 2004 and is expected to continue growing in 2005. Growth has been driven by construction and a sharp revival of tourism. While the impact of Hurricane Ivan on Grenada was severe, there was limited damage in the remaining ECCU countries which grew by an average of about 4 percent. In view of the continued growth in the region's major tourism markets—the United States and the United Kingdom—a similar growth rate is projected for the ECCU this year. Supported by the regional monetary arrangement at the ECCB, inflation in the region remains low. These positive developments provide an opportunity for reducing unemployment and poverty and raising living standards in the region."

"Progress with fiscal consolidation has been mixed and public debt to GDP ratios have risen in most countries. The sharp improvement in fiscal outcomes seen throughout the region in 2003 was partially reversed in several countries in 2004. Prospects for fiscal adjustment in 2005 will depend in part upon the ability of governments to maintain fiscal discipline ahead of elections due in three countries in the coming two years. The high interest costs of servicing the public debt—ranging from 3 percent to more than 9 percent of GDP—reduce the room for other priority expenditures and constrain the ability of governments to respond to adverse shocks. The governments have already expressed the need to reduce the high public debt levels through a combination of fiscal consolidation, growth, asset sales, and debt management, and many are already working towards achieving this goal."

"It is against this background that the mission will discuss policy options with national and regional authorities. The IMF team would like to thank the authorities of Antigua and Barbuda for the insightful and open discussions we are having. The authorities have embarked on a bold fiscal reform designed to restore normalcy in fiscal and debt relations. We wish them every success in this effort, as well as in meeting future challenges of economic vulnerability and in exploiting the opportunities afforded by globalization."