The Ninety-Fourth Meeting of the Monetary Council of the Eastern Caribbean Central Bank (ECCB) was held at the ECCB Headquarters, Basseterre, St Kitts and Nevis, on 11 October 2019 via videoconference, under the Chairmanship of Dr The Right Honourable Keith Mitchell.
Council received the Governor’s Report on Monetary and Credit Conditions in the Eastern Caribbean Currency Union (ECCU) based on the first nine months of 2019, or at least the first half of 2019, where data were available. The Report focused on recent trends in monetary and credit conditions against the backdrop of global economic and financial developments and within the context of the Bank’s broader objectives of ensuring the stability of the exchange rate and the financial system.
Council was apprised of the following:
- The exchange rate anchor remained stable and strong during the review period supported by sufficient foreign reserves, which could support 5.6 months of imports.
- The EC dollar remained strong with the backing ratio of 99.3 per cent and the international reserves at EC$4.4b as of 4 October 2019.
- Domestic credit extended by commercial banks was projected to increase by 1.4 per cent by 30 September 2019. The rise was largely driven by credit to the private sector, which expanded by 1.1 per cent.
- Monetary and credit conditions in the ECCU during the first nine months of 2019 were assessed as being favourable, reflected in an increase in money and credit to the private sector.
- Factors impeding credit conditions over the last few years declined, resulting in the recovery of lending growth, especially in the commercial banking sector.
- Economic activity was estimated to have increased at the ECCU level during January to September 2019, compared with the first nine months of 2018.
- Growth in the ECCU was forecast as 3.3 per cent in 2019 and 3.2 per cent in 2020.
- The global economy had slowed on account of US-China trade war, tensions in the Middle East and Brexit.
The Monetary Council received the Financial Stability Report for the ECCU for the period January to September 2019. The report revealed that the ECCU’s financial system remained broadly stable during the first nine months of 2019. The report also indicated that the financial sector continued to experience growth, as evidenced by the rise in both assets and deposits; and credit growth had become more sustained and broad-based across sectors.
Fiscal and Debt Sustainability
Council was apprised that the ECCU region was projected to register an overall fiscal deficit of $32.9m in the first nine months of 2019, in contrast to an overall surplus of $171.5m in the corresponding period of 2018. Despite the predicted decline in overall fiscal performance, the Debt to GDP ratio for the ECCU was forecast to decrease to 66.2 per cent from the 68.3 per cent recorded at the end of 2018.
Growth and Competitiveness
Council noted that growth remained resilient at the ECCU level, despite international conditions. Key contributing factors to growth included: an increase in tourist arrivals, higher public and private sector investments and an increase in Government consumption.
Report From the Technical Core Committee on Insurance (BAICO and CLICO)
Council noted that with reference to the BAICO resolution, a payment of approximately EC$30m was made during the third quarter of 2019.
In December 2018, the JM CIL Montserrat filed an Application for Leave to appeal the decision of the Court to dismiss the Joinder Application in Financial Services Commission v. CLICO International Life Insurance Company. The application was heard on 27 February 2019 and a written decision to dismiss the application was delivered on 16 May 2019. To this end, the ECCU was exploring recourse through the Caribbean Court of Justice (CCJ) option and was awaiting an opinion from its lawyers in Barbados on the matter.
Date and Venue of 95th Meeting of the Monetary Council
Council agreed to the convening of 95th Meeting of the Monetary Council on Friday, 14 February 2020 in St Kitts and Nevis
Council Members attending the meeting were:
- Dr The Right Honourable Keith Mitchell, Prime Minister and Minister for Finance, Grenada (Chairman);
- The Honourable Victor F Banks, Premier and Minister for Finance, Anguilla;
- The Honourable Gaston Browne, Prime Minister and Minister for Finance, Antigua and Barbuda;
- The Honourable Donaldson Romeo, Premier and Minister for Finance, Montserrat;
- The Honourable Camillo Gonsalves, Minister for Finance, St Vincent and the Grenadines;
- The Honourable Delmaude Ryan, Monetary Council Alternate, Montserrat; and
- The Honourable Bradley Felix, Temporary Alternate, Saint Lucia.