 | |
| The St. Kitts-based headquarters of the Eastern Caribbean Central Bank. (Photo: Erasmus Williams) | |
ST JOHN'S, Antigua, July 24, 2008 - Economic activity in the member territories of the Eastern Caribbean Currency Union (ECCU) is estimated to have expanded five percent last year, but growth is expected to slow down this year due to a declining global economy and rising food and commodity prices.
Governor of the Eastern Caribbean Central Bank (ECCB) Sir Dwight Venner reported at the institution's recent 62nd Monetary Council Meeting here that "with regard to monetary and credit conditions, it was noted that some moderation in the growth of both deposits and domestic credit is forecasted, reflecting the slowdown in growth in the domestic economy".
On the bright said, he said, deposits in the banking system expanded by 9.5 percent for the first the first four months of this year, reflecting the relatively strong economic growth experienced during the period.
"Economic activity is estimated to have expanded by 5.2 percent in 2007, following growth of 6.3 percent in the previous year and has continued to expand in the first quarter of 2008," said a communiqué issued at the end of the meeting.
The Bank's Governor reported continued robust growth in credit facilitated by more favourable lending terms and conditions from commercial banks, especially for loans to households. For the period, domestic credit increased by 16.9 percent, the bulk of this credit being extended for personal mortgages.
Commercial bank liquidity remained well within prudential limits despite the significant expansion in credit. This was due to the fact that commercial banks financed the expansion in part by borrowing from abroad and drawing down on their external assets, the bank said.
Sir Dwight also reported that the level of the Central Bank's foreign reserves continued to increase and was consistent with the requirements for maintaining the strong peg to the United States dollar.
"The real effective exchange rate (REER) continued its downward trend mirroring the decline in the US dollar against major currencies. This depreciation in the REER would have enhanced the international competitiveness of ECCU exports to non-US destinations, and in particular the tourism product," said the communiqué.
Meantime, laws to fill the gaps in the regulation of credit unions and cooperative societies in the ECCU countries should be completed by December this year.
The ECCB's Monetary Council has agreed that the drafting and enactment of comprehensive legislation to rationalise the regulation and supervision of the cooperative societies, in line with the objectives of the single regulatory framework, was a priority task.
The Council, the ECCB's highest decision-making authority, has urged the Central Bank to pursue, with urgency, the finalisation of the appropriate legislation with the aim of completion by December 2008.
|
