ECCB 2020-2021 Annual Report and Statement of Accounts

GOVERNOR’S FOREWORD

Bouncing Forward: Charting the Recovery, Resilience and Transformation of the ECCU “Where there is no vision, there is no hope.” ~ George Washington Carver

T he Eastern Caribbean Currency Union (ECCU), like the rest of the world, has faced the crucible of the COVID-19 pandemic over the past year. The toll on lives and livelihoods as the pandemic washed over us in waves, has been unimaginable. The struggle to protect lives and restore livelihoods is real and relentless. As at 31 March 2021, 100 lives had been lost in the ECCU to COVID-19. The Eastern Caribbean Central Bank (ECCB) family conveys deepest condolences to all those who have lost loved ones in the ECCU and the diaspora. The economic loss, too, is grave, with 2020 posting the worst GDP contraction on record: 14.0 per cent. According to the April 2021 edition of the World Economic Outlook from the International Monetary Fund (IMF), the impact of the pandemic on the global economy in 2020 was a decline of 3.3 per cent. The significantly worse performance of the ECCU reflects the heavy reliance of our economies on the now decimated Tourism sector. The extent of the economic carnage in the ECCU is even starker when the contraction is juxtaposed with the growth of 3.3 per cent that was forecast for 2020 prior to the onset of the pandemic. The ECCU member governments have had to embark on extraordinary spending programmes to stanch the waves of the pandemic, and provide care and relief packages to their distressed citizens, businesses and economies. The governments’ efforts were undertaken in an environment of low revenues, necessitating additional debt contraction. The result has been a widening of the fiscal deficit to $1.5 billion in 2020, from $0.8 billion in the preceding year. The region’s debt-to-GDP ratio has risen to 85.6 per cent in 2020 from 67.2 per cent in the preceding year. Ever mindful of the imperative of fiscal and debt sustainability but cognisant of the current projections for the recovery of Tourism (around 2023), the Monetary Council took the weighty decision to defer the target of attaining Debt-GDP ratio of 60 percent to 2035 from 2030. This was a carefully considered decision but a necessary one to ensure that adequate fiscal support could be maintained to fight the ongoing war against COVID-19 and to resuscitate the economies. At this time, the region’s focus remains resolutely on safeguarding lives and livelihoods. The ECCB’s response, in the midst of the turmoil, has been focused, determined and comprehensive. The centrepiece of this response has been articulating a vision for the region in a three-year Programme of Action for Recovery, Resilience and Transformation of the ECCU Economies . The Programme was approved by the Monetary Council in October 2020. It maps out a clear direction to help the region navigate these tumultuous times over the short to medium term. The Programme is goal-driven and action-oriented. It is guided by the principles of regional integration and solidarity, sustainable and innovative financing, inclusive growth, and innovation and competitiveness. Its aligns well with ECCB’s Strategic Plan and will to serve as a companion document to it, the Programme is established on four pillars: 1. Financial stability; 2. Fiscal and debt sustainability; 3. Resilient and inclusive growth; and 4. Payments modernisation and digital transformation.

xi EASTERN CARIBBEAN CENTRAL BANK ANNUAL REPORT 2020/2021