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“Of note, ECCU Governments contracted an additional $1 billion of debt in 2020. Much of this debt helped to plug the massive financing gaps occasioned by the pandemic. It ought to be recalled that government revenues plummeted by as much as 50 per cent in some countries.”
We learn there too that:
Fiscal buffers are an essential part of the resilience toolkit of Caribbean countries.
Vulnerability must be explicitly considered by the international financial institutions if they are to craft timely and effective responses to the needs of Caribbean economies.
Listed as well is the important fact that many crises have impacted on the Caribbean over the past two decades, making it essential to respond in a manner that addresses these serious setbacks in an effective manner, something the ECCB works assiduously to achieve.
One of the enduring lessons of the current pandemic highlighted is the criticality of fiscal buffers.
You might ask why the need for disaster-linked debt clauses is important.
Since 2016, the ECCB has consistently advocated for the adoption of disaster-linked clauses in all debt contracts of Small States. Governor Antoine has argued that, similar to the way in which banks have extended loan deferral programmes or moratoria to borrowers, sovereigns such as our Small States require a similar facility in the event of major shocks.
Grenada pioneered this in its debt restructurings in 2014 and 2015 with what is popularly referred to as the hurricane clause.
The blog also highlights that the failure by the international financial institutions to adopt a Global Vulnerability Index means “they are stuck with the analytical absurdity of relying on per capita income to determine access to concessional financing for middle income countries”.
One Caribbean leader quoted about the effect of this is the Prime Honourable Minister of Barbados, Mia Amor Mottley, who says that middle income countries risk being “pauperised” without access to concessional financing.
So, with the wealth of information available on the blog, making the ECCB blog a frequent read is something you need to put on your agenda.
Part of the aim is to nurture a more economically informed Eastern Caribbean citizen. The blog is the Central Bank’s newest initiative to strengthen our engagement with you, the citizens and residents of the Eastern Caribbean Currency Union. Through this platform, the Bank will share with you, insights on its strategic priorities and projects for the well-being of the people of the Eastern Caribbean Economic Union (ECCU).