St Kitts-Nevis Prime Minister Dr Timothy Harris says the Eastern Caribbean Central Bank (ECCB) is expecting between 10 per cent and 20 per cent decline in the economies of the sub-region this year as a result of the measures taken to prevent the spread of the coronavirus (COVID-219) pandemic.
Harris, who took over the chairmanship of the ECCB Monetary Council from his Grenadian counterpart, Dr Keith Mitchell, told the virtual handover ceremony on Friday that the lockdowns of the economies and closures of the vital tourism sector had contributed to the situation.
“A gradual recovery is projected in 2021,” he said, adding that the monetary council, during his one-year tenure, would exercise responsible, prudent and unified leadership “as we chart the path forward our economic recovery and resilience”.
He said he would focus on three main areas during the year, namely monetary stability, financial stability and growth and competitiveness.
Harris said that the Eastern Caribbean dollar, which is pegged to the US currency at an exchange rate of US$0.37 cents, has served to anchor the sub-region’s macroeconomic stability and confidence.
Harris said with the reduced inflows into the region, the Council and the ECCB, which serves as a central bank for Antigua and Barbuda, Dominica, Grenada, St Lucia, St Vincent and the Grenadines, St Kitts-Nevis, Montserrat, will “continue to be meticulous in the management of our foreign reserves to ensure that the EC dollar remains strong and continues to serve our people and economies by delivering low inflation, convertibility and consumer and investor confidence”.
Harris said that financial stability for the rapid recovery of the region is critical, noting that the loss of jobs as a consequence of COVID-19 “has adversely impacted the financial sector and many of our citizens and residents unfortunately are now unemployed or are now receiving reduced income thereby making it challenging to meet their financial obligations.
“The ECCB will prudently support the banking sector’s loans deferral programmes to provide the prerequisite support for the affected customers without of course compromising financial stability,” said Harris, who is also the Finance Minister here.
He said that among the recommendations that will be put forward, is a programme designed to “ensure an optimal regulatory framework for the financial system” in the Eastern Caribbean Currency Union (ECCU).
“This will include a careful review and more efficacious division of responsibilities on how the ECCB, the Eastern Caribbean Securities Regulatory Commission and the national regulatory commissioners. The aim is to protect customers and consumers while enhancing financial stability and essential to sustain growth and prosperity.”
Harris said that the Monetary Council will continue address threats such as the loss of corresponding banking relationships, money laundering and terrorist financing.
“Additionally the bank will forge ahead with the establishment of a credit bureau and a deposit insurance system for the ECCU. These initiatives will create more opportunities for business start-ups and expansion while strengthening the resilience of the financial sector”
Harris noted that the ECCB last year recorded record profits on its operations in excess of EC$63 million and praised the Governor Timothy Antoine and his staff for their drive and tenacity in pushing the St. Kitts-based financial institution forward.
Harris also disclosed that the Monetary Council would redouble its efforts to support the digitalisation of the region, adding “in this vein I look forward to the launch of the ECCB Digital Cash pilot.
“The Monetary Council will consider a modern payment system and service legislation as we press forward with the modernisation of our payment system. We look forward to fast track implementation of the Caribbean Digital Transformation programme funded by the World Bank.
“The programme aims to construct an inclusive digital economy to increase broadband connectivity, access public services, access digital financial services and digital skills by businesses and individuals,” he added.
Harris said that as the sub-region moves forward amidst “these unprecedented challenges and remodel our economies for resilience and shared prosperity let us proceed with this strong and renewed sense of regional solidarity”.