ECCB 2017-2018 Annual Report and Statement of Accounts

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ECCB ANNUAL REPORT 2017/2018

Maintaining Sufficient Foreign Reserves to Support the EC Dollar The fixed exchange rate arrangement remained stable in 2017 on account of a continued increase in reserve accumulation and domestic growth among ECCB member countries. As at 30 March 2018, the backing ratio was 97.4 per cent. This is the ratio of foreign assets to demand liabilities and it remained well above the statutory limit of 60.0 per cent and the operational limit of 80.0 per cent during the period under review. The maintenance of the fixed exchange rate arrangement continues to contribute to the stability of prices within the ECCB member countries. Consumer prices were estimated to have increased by 0.17 per cent as at the end of March 2018, compared with a rise in prices of 0.62 per cent as at the end of March 2017. The increase in consumer prices was reflected in the price change in global commodity markets – especially for crude oil -

which increased relative to the cost in March 2017. Real economic growth was estimated at 1.77 per cent in 2017, a lower rate when compared to the estimated growth rate of 2.86 per cent in 2016 (revised upwards from 2.2 per cent). The lower growth rate in 2017 was mainly on account of declines in Anguilla and the Commonwealth of Dominica of 5.1 per cent and 4.2 per cent respectively. These lower rates can be traced to the impact of hurricanes Irma and Maria in 2017 – which led to severe damage in those islands. However, output in other ECCB member states was supported by activities in real estate, renting and business activities, transport storage and communications, construction, wholesale and retail trade and hotels and restaurants. Growth in the ECCU is expected to recover in 2019 to 3.5 per cent – in line with global output and on account of expected economic recoveries in Anguilla and the Commonwealth of Dominica.

The money supply (M2) was estimated to have increased by 3.5 per cent in 2017 relative to growth of

Chart 1 - Backing ratio with statutory and operational limits - 2010 to 2018