The Eastern Caribbean Currency Union( ECCU) economy has been severely disrupted and will contract between 10.0 and 20.0 per cent in 2020 before starting to recover in 2021.
The disclosure came as the Ninety-Sixth Meeting of the Monetary Council of the Eastern Caribbean Central Bank (ECCB) was held on 24 July 2020, via videoconference.
According to an ECCB release, the Monetary Council received the Governor’s Report on Monetary and Credit Conditions in the Currency Union for the period January to June 2020.
In addition to noting the situation with the ECCU economy, the report noted that key risks to the anticipated recovery include: a delay in the global rebound; permanent job losses and business closures; natural disasters; and increasing credit and liquidity risks in the financial sector.
“Monetary and credit conditions in the ECCU deteriorated in the first half of 2020. That is, both the level of money available and credit extended decreased. This trend is projected to persist for the remainder of the year,” the report observed.
It said strong foreign exchange buffers, as a consequence of the ECCB’s prudent management of foreign reserves, coupled with financial stability will support gradual improvement in economic, monetary and credit conditions.
Having received the Governor’s Report and recommendations, the Council decided to maintain the Central Bank’s Discount Rate at 2.0 per cent and maintain the Minimum Savings Rate at 2.0 per cent, the release on the ECCB’s official website said.