ECCU projects nearly EC$33 million fiscal deficit for first nine months of 2019

The Eastern Caribbean Central Bank is reporting an overall fiscal deficit of nearly EC$33 million for the first three quarters of this year.

At its just concluded 94th meeting via teleconference, the Monetary Council was informed that the ECCU region is projected to register an overall fiscal deficit of EC$32.9 million in the first nine months of 2019, in contrast to an overall surplus of EC$171. 5 million 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,” the Council said in its communique following its meeting on October 11, 2019.

The Monetary Council received the Financial Stability Report for the ECCU for the period January to September 2019 which 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.

According to the communique, Council members were apprised of several issues:
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$4.4 billion 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 and the global economy had slowed on account of US-China trade war, tensions in the Middle East and Brexit.

Council also 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.

The Ninety-Fourth Meeting of the Monetary Council of the Eastern Caribbean Central Bank (ECCB) was held at the ECCB Headquarters in Basseterre, via video-conference, under the Chairmanship of Dr The Right Honourable Keith Mitchell, Prime Minister and Minister of Finance of Grenada.

The 95th Meeting of the Monetary Council will take place on Friday, 14 February 2020 in St Kitts and Nevis.