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 March 31, 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 March 31, 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 the ECCU economies rode several waves of 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 programs 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 a recent report released in May 2022 by the World Meteorological Organization paints an ever-escalating picture of climate risk, predicting a 50 percent likelihood that, in the next five years, global temperatures will surpass the 1.5 degrees Celsius ceiling necessary to contain the worst effects of climate change.
Antoine said before the war in Ukraine, in January 2022, the International Monetary Fund (IMF) projected global economic growth of 4.4 percent 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 percent – 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 percent realized in 2021. The Eastern Caribbean Central Bank’s initial forecast for ECCU growth of 6.7 percent 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.