Eastern Caribbean Currency Union: Selected Issues

July 29, 2022

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Eastern Caribbean Currency Union: Selected Issues, (USA: International Monetary Fund, 2022) accessed November 21, 2024

Summary

This Selected Issues paper focuses on scarring effects of the pandemic on the Eastern Caribbean Currency Union’s (ECCU). Assessing the extent of the scarring effects is essential for the conduct of future economic policy in the ECCU. A better understanding of the factors affecting the scarring effects and their fiscal implications could help inform the discussions on policies needed to overcome them, especially for economies with limited economic diversification and high vulnerability to frequent shocks and natural disasters such as the ECCU countries. The significant output contraction would generate scarring effects in the ECCU countries. The degree of scarring could vary with countries’ economic structure and policy responses to the pandemic. ECCU countries need to balance difficult tradeoffs to mitigate scaring effects of the pandemic, other recent shocks, and limited fiscal policy space. In the short term, the priorities are to continue health spending to cope with the pandemic and use effective social transfers to cope with rising living costs. In the medium term, moving from income support and job retention measures to adopting active labor market policies would facilitate the reallocation of workers and resources to their most productive uses and help foster productivity growth.

Subject: Environment, Fiscal policy, Health, International organization, Monetary policy, Public debt

Keywords: B. output loss, Caribbean, COVID-19, Difference in Debt-to-GDP projection, ECCU country, Fiscal rules, Fiscal stance, Global, Natural disasters, Real GDP loss, Responsibility framework

Publication Details

Pages:

42
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2022/254
Stock No:

1ECCEA2022002
ISBN:

9798400217272
ISSN:

1934-7685

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