ECCB 2016/2017 Annual Report

ECCB ANNUAL REPORT 2016/2017

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T he financial year ended 31 March 2017 could be considered an inflection point for the Bank as it returned to profitability and new work programme initiatives were embarked upon under new leadership. Although work on the key strategic priorities: financial stability, monetary and exchange rate stability and growth and competitiveness advanced, focus was also placed on some new initiatives related to improving the effectiveness of the institution to deliver on its statutory mandates. Improvements in international financial markets, especially in the USA, where some upward adjustments were made to the Federal Reserve’s policy rate, recovery in manufacturing and trade, supported by stable and relatively low oil prices, all contributed to an expansion in global growth. The favourable external environment provided the impetus for expansion of economic activity in the currency union and improved performance of the portfolio of invested reserves. Overall, the financial year was dominated primarily by an intensification of work on implementing key reforms that support development and modernisation of the financial sector as well as initiatives aimed at enhancing the operational and policy making effectiveness of the ECCB. In addition, there was significant advancement in the finalisation of a new Strategic Plan for 2017 – 2021, which seeks to provide a road map for addressing the challenging international and regional policy landscape and broader support to the transformation of the currency union through the Economic Union Project. The overview of work pursued and accomplishments attained during the financial year will be organised around the following key strategic themes of:Monetary

and Exchange Rate Stability; Financial Sector Stability and Market Development; Fiscal and Debt Sustainability; Growth, Competitiveness and Employment and Organisational Effectiveness. MAINTAINING MONETARY AND EXCHANGE RATE STABILITY A core function of the Bank is to maintain monetary and exchange rate stability. These are translated into specific objectives which focus on ensuring that the parity of the peg to the US dollar is maintained, through the sufficiency of reserves to ensure convertibility at the current rate of EC$2.70 to US$1.00. This has been further broken down into measureable targets of a statutory backing ratio of 60.0 per cent and an operational target of 80.0 per cent. In this regard, the Bank has had a successful record over its 34-year existence. At the end of the financial year, the backing ratio stood at 97.39 per cent and domestic inflation was relatively low and in line with that in the USA. There was significant advancement in the finalisation of a new Strategic Plan for 2017 – 2021, which seeks to provide a road map for addressing the challenging international and regional policy landscape and broader support to the transformation of the currency union through the Economic Union Project.