The central bank for eight islands in the Eastern Caribbean again left its benchmark interest rate steady and forecast the region's economy would shrink 16.2 percent this year, cautioning a recovery depends on the continued resilience of health systems, containment of the COVID-19 virus, availability and access to vaccines, and fiscal and financial support.
The Eastern Caribbean Central Bank (ECCB), the monetary authority for eight nations, left its benchmark discount rate at 2.0 percent after slashing it by 450 basis points at a special meeting of the bank's monetary council in April.
The rate cut in April was the ECCB's first rate cut since 2003.
At the council's previous meeting in July it also left the rate steady and forecast the region's economy would contract between 10 and 20 percent this year.
"The COVID-19 pandemic has had an extremely damaging impact on the ECCB member countries through disruptions in the Travel and Tourism sector and Foreign Direct Investment," the council said following a meeting conducted via videoconference.
The economic contraction is projected to be uneven across the eight islands, ranging from 5.5 percent to 30.0 percent, with countries that rely heavily on tourism and have limited fiscal space likely to have slower recoveries.
In 2021 the ECCB forecast an economic rebound for the region, with growth of 5.1 percent, similar to its forecast in July.
The ECCB added monetary and credit conditions in the ECCU have deteriorated during the first nine months of the year but the financial system had remained stable despite an elevated level of non-performing loans that is likely to rise following the expiration of the loan moratorium under the deferral program.
As of Aug. 31, licensed financial institutions reported moratoria on 26,194 loans with an outstanding balance of $5.2 billion, or 39.3 percent of total loans.
ECCB was set up in 1983 to maintain the stability of the Eastern Caribbean Currency (ECCU) and the banking system in its members: Anguilla, Antigua and Barbuda, the Commonwealth of Dominica, Grenada, Montserrat, St. Kitts and Nevis, Saint Lucia, and St. Vincent and the Grenadines.
Members of ECCU use the East Caribbean Dollar as their common currency, and it has been pegged to the U.S. dollar at 2.70 since 1976. EC$ has existed since 1965.
ECCB was set up in 1983 to maintain the stability of the Eastern Caribbean Currency (ECCU) and the banking system in its members: Anguilla, Antigua and Barbuda, the Commonwealth of Dominica, Grenada, Montserrat, St. Kitts and Nevis, Saint Lucia, and St. Vincent and the Grenadines.
Members of ECCU use the East Caribbean Dollar as their common currency, and it has been pegged to the U.S. dollar at 2.70 since 1976. EC$ has existed since 1965.
