Global financial crisis to hurt growth in ECCU

The global financial crisis that has gripped the world will continue to affect the member countries of the Eastern Caribbean Central Union (ECCU).{{more}}

At the 64th meeting of the Monetary Council of the Eastern Caribbean Central Bank (ECCB), held in St Kitts last week, the Council noted that the “growth prospects for the ECCU economies would continue to be adversely impacted by the unfolding global developments.”

It was determined that as activity in most of the major trading partners of the ECCU slows down or even contracts in 2009, the growth rate for the ECCU countries will hobble under one percent, at 0.8 percent following 2008’s estimated 2.4 percent growth.

Dr Gonsalves, speaking to reporters on Monday, February 16, 2009, on his return from the meeting, read from the official communiqué, which indicated that in the midst of the challenges a “key imperative of the Central Bank at this time was to protect the stability of the financial system and maintain creditability of the EC currency.”

Dr Gonsalves said that the CLICO situation was also being monitored very closely as the combined Organization of Eastern Caribbean States (OECS) exposure in investments in CL Financial companies is between EC$1.7 and EC$2 billion.

“This indicates the extent of the strength of this particular company through the region, and how it has pervaded the sub-region, and that is why the government of Trinidad and Tobago must be commended for its swift action…and similarly the government of Barbados in relation to CLICO Barbados,” Dr Gonsalves said.

“But clearly, we have to be keeping the matter under review all the time,” he added.

Dr Gonsalves said that he is also noting the possible divestment of the shares of the Republic Bank of Trinidad and Tobago (RBTT).

“The value of those shares will fill substantially the gap in the liability which the Central Bank of Trinidad and Tobago has been talking about,” he said.

At the meeting, the Council also received updates on the progress towards the establishment of the Eastern Caribbean Enterprise Fund (ECEF) and the OECS Distribution and Transportation Company (ODTC), “two initiatives geared towards the overall development and competitiveness of the region and in support of the region’s private sector recovery activities,” the communiqué states. (KJ)