The International Monetary Fund (IMF) says economic recovery in the Eastern Caribbean Currency Union (ECCU) is gaining ground, supported by continued low oil prices, strong tourism arrivals, and robust citizenship-by-investment receipts. The IMF said that three failed banks have been resolved with no spillovers to the rest of the region and fiscal management has improved.
The ECCU includes Antigua and Barbuda, Dominica, Grenada, St Lucia, St Vincent and the Grenadines, St Kitts-Nevis, Montserrat, and Anguilla.
The IMF said that it welcomed the progress in the ECCU in addressing key challenges and the regional economic recovery, and that risks to the near term outlook are balanced, but growth in the ECCU continues to be hindered by weak competitiveness, banking sector fragilities, susceptibility to natural disasters, and large public debt.
In this context, the IMF said it is encouraging the authorities to press ahead with sound macroeconomic policies and structural reforms to decisively address these issues and strengthen the conditions for robust long-term growth.
It commended the decisive actions taken to strengthen the resilience of the banking system. In particular, the Washington-based financial institution welcomed the passing of key banking legislation, and the successful resolution of three insolvent banks.
They encouraged the authorities to promote consolidation within the regional indigenous banking system to strengthen its long run viability and help lower the risk of further withdrawal of correspondent banking relationships from the region.
In particular, the financial institution is recommending formulating detailed medium-term fiscal adjustment plans and underpinning them with fiscal rules as well as continued enhancements to public finance management frameworks.
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