(CMC) – The Governor of the Eastern Caribbean Central Bank (ECCB), Timothy Antoine, says the economies of the Eastern Caribbean Currency Union (ECCU) felt the full weight of what he described as an “unprecedented and complex” global economic and geopolitical environment.
The ECCB has released its 2021-2022 Annual Report and Statement of Accounts for the financial year ended 31 March 2022, showing that the St. Kitts-based financial institution had recorded a net loss of EC$49.1 million (One EC dollar=US$0.37 cents) for the year ended 31 March 2022 compared to a net profit of EC$25.2 million in the previous financial year.
The ECCB, which serves as a central bank for the islands of Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts- Nevis, St. Lucia and St. Vincent and the Grenadines, said the net loss for the year was largely driven by losses on foreign investment securities, combined with a decline in interest income earned on foreign reserve assets, as interest rates globally remained at historically low levels over the year.
Antoine said despite the weak global financial environment which resulted in the ECCB’s first loss-making year in six years, the Bank continues to manage the reserves prudently thereby maintaining the strength and stability of the EC dollar.
Antoine said that the ECCU economies rode several waves of the coronavirus (COVID-19) infections, including from new variants of the virus, in the past year.
“Undoubtedly, member governments’ considerable efforts to vaccinate their populations helped save many lives and contributed to safeguarding livelihoods. With vaccination programmes progressing, and the infections waning, ECCU countries, like many other countries, began a cautious re-opening of their economies to commence the economic recovery.
“Green shoots of recovery emerged in the latter half of the 2021/2022 financial year. Alas, the long-awaited and nascent recovery from COVID-19 is now being curtailed by conflict. Yet another shock not of our region’s making. To say nothing of the perennial threat to the region from climate change,” Antoine said.
The ECCB Governor said that a recent report released in May 2022 by the World Meteorological Organization paints an ever escalating picture of climate risk, predicting a 50 per cent likelihood that, in the next five years, global temperatures would surpass the 1.5 degrees Celsius ceiling necessary to contain the worst effects of climate change.
“After the deepest downturn on record for the ECCU economies, where the economy contracted by 17 per cent in 2020, our region had an uptick in economic activity in 2021, at an estimated rate of 3.9 per cent. This upturn in the region’s performance reflected developments in the wider global economy, to which the ECCU is so inextricably linked.”
Antoine said before the war in Ukraine, in January 2022, the International Monetary Fund (IMF) projected global economic growth of 4.4 per cent for 2022. But just three short months later, in the IMF’s April 2022 edition of the World Economic Outlook, that figure had been revised downward to 3.6 per cent – shaving off almost a full percentage point from the initial projection – largely due to the impact of the war in Ukraine.
“This lower projection also represents a significant slowdown from the outturn of 6.1 per cent realised in 2021. The Eastern Caribbean Central Bank’s initial forecast for ECCU growth of 6.7 per cent for 2022 will, with great disappointment, most likely have to be revised downward in light of the current global realities,” Antoine said.
The Grenada-born ECCB Governor said in the current complex economic and policy environment, creative thinking, innovative solutions and urgent collective action are needed to overcome the obstacles to recovery, resilience and transformation
“This growth mindset imbues the ECCB’s strategic approach to supporting the ECCU region. The approach has come to be known as the ECCB Transformation Model (ICAR) whereby we Ideate, Create, Advocate and Replicate.”
He said this model of transformation encapsulates a dynamic process for strategically transforming the region, commencing first in the internal transformation theatre at the Bank and ultimately expanding to the external theatre of the wider region.
Antoine said the model informed the development of the Bank’s sophomore strategic plan, styled “Transforming the ECCU through Innovation and Collective Action,” which is slated for a public launch early in the 2022/2023 financial year. The model was also seen in full force over the 2021/2022 financial year in several initiatives championed and implemented by the Bank, under the five key strategic themes of the new strategic plan for 2022-2026.