ECCB 2016/2017 Annual Report

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ECCB ANNUAL REPORT 2016/2017

(expressed in Eastern Caribbean dollars) Eastern Caribbean Central Bank Notes to the Financial Statements March 31, 2017 (expressed in Eastern Caribbean dollars) 2. Summary of significant accounting policies …continued s) Employee benefits …continued Staff pension plan ...continued

EASTERN CARIBBEAN CENTRAL BANK NOTES TO THE FINANCIAL STATEMENTS

March 31, 2017

Under this method, the cost of providing pensions is charged to the statement of comprehensive income so as to spread the regular cost over the service lives of employees in accordance with the advice of qualified actuaries who carry out a full valuation of the plan every three years. The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of long-term government bonds that are denominated in the currency in which the benefits will be paid, and which have terms to maturity approximating the terms of the related pension liability. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised immediately in other comprehensive income. Past-service costs are recognised immediately in the statement of profit or loss. The pension plan is funded by payments from employees and the Bank, taking into account the recommendations of independent qualified actuaries. Prepaid employee short term benefit The Bank facilitates loans to its staff at rates that are relatively low in comparison to the normal market rates in the Eastern Caribbean Currency Union (ECCU). These loans are recognised at fair value using a normal market rate, and the difference between the fair value and the consideration given to the employees is recorded as a pre-paid short term employee benefit. The pre-paid short- term employee benefit is amortised through the statement of profit or loss over the expected service life of the relevant individual employees or the expected life of the relevant individual loans, whichever is shorter. t) General reserve The Eastern Caribbean Central Bank Agreement Act 1983 – Article 6(3) (as amended) provides that “if and so long as the general reserve is less than 5% of the Bank’s demand liabilities at the end of a financial year in which net profits were earned the Bank shall allocate to the general reserve one half of such net profits or such smaller amount as will make that reserve equal to 5% of those liabilities; provided however that with the written agreement of each of the participating governments further allocation may be made to increase the general reserve beyond five per cent but not more than ten per cent of the Bank’s demand liabilities.” For the year ending March 31, 2017 an amount of $6,238,544 was allocated to General Reserves. In 2016, an amount of $10,012,002 was transferred from General Reserves to cover the deficit position of the Bank. At March 31, 2017, the general reserve ratio stood at 2.34% (2016: 2.21%), which is 2.66% (2016: 2.79%) below the 5% target.

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