ECCB Governor tells A&B to reduce debt

ECCB Governor tells A&B to reduce debt

Antigua Observer:-The Eastern Caribbean Central Bank (ECCB) is advising the government to institute a debt ceiling and a cap on state payroll to reduce its staggering 92 percent debt to gross domestic product (GDP) ratio the highest in the eastern Caribbean Currency Union (ECCU).

During a recent visit to the twin island state, Governor of the ECCB Timothy Antoine said he would encourage the government here to follow the lead of Grenada and Anguilla in enacting “fiscal responsibility legislation.”

“A fiscal law basically makes governments live within their means… You first set a debt ceiling (and)… set a primary surplus,” he said, adding, “In the case of Antigua & Barbuda it’s at 92.1 per cent, therefore you have to work assiduously to get down to the target.”

Antoine wants all ECCU states to achieve a debt to GDP ratio of 60 per cent by 2030.

“It is extremely important that Antigua & Barbuda sets interim targets… We encourage them to set a target for 2020 and 2025,” he said.

Prime Minister, and Minister of Finance, Gaston Browne said that though a 60 per cent aim for 2030 was “desirable,” the government’s aim may ultimately be higher.

“I believe we can do it. But, in any event, we may not necessarily desire to be at 60 per cent. It could be 65 or 70 per cent. It all depends on whether or not we can service loans at 65 or 70 and still have reasonable development,” he said.

On the possibility of enacting fiscal responsibility legislation, Browne said, “It’s something we’ll look at, at some point, but as it stands now, we’re running a very disciplined ship,” he said, adding “We have had one of the strongest primary surpluses for the last 22 months compared to others in the region.”

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2 Comments

  1. Cleo
    May 17, 2016 at 12:37 pm Reply

    Thanks Sir for the advice to the Prim Ministers of the region. Please give the St. Lucia’s Prim Minister his target..We the people of St. Lucia are afraid with the trend our Country is going.

  2. Jacques Boucle
    May 24, 2016 at 3:08 pm Reply

    Wrong! In a sluggish economy it is of great importance for government to implement stimulus packages. Belt tightening during this particular juncture would further exacerbate the recession. A low debt to GDP ratio is not practical. Most OECD (Organization for Economic Cooperation and Development) countries have debt-to-income ratio above 100%. Japan has a debt-to-income ratio of 235% yet they are still functioning efficiently. It is only academic to propose a debt-to-income ratio of 70%. Countries like Somalia and Haiti have very low debt-to-income ratio but they are referred to as failed states.

    Instead of calling for low debt-to-income-ratio the ECCB should encourage quantitative easing whereby it reduces its long and short term interest making it easier for government and investors to have the requisite capital to grow the economy. If the Caribbean countries were to heed your advise they would all be failed states.

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