Fiscal Sustainability and Policy Issues in the Eastern Caribbean Currency Union

Author/Editor:

Anthony J. Pellechio ; Saqib Rizavi ; Phebby Kufa

Publication Date:

August 1, 2003

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The fiscal position of the Eastern Caribbean Currency Union (ECCU) has deteriorated significantly in recent years, resulting in sharp increases in public debt. The sustainability of public debt is examined using the public sector budget constraint to derive the maximum public-debt-to-GDP ratio that can be sustained based on a country's projected steady-state primary balance, interest rate on public debt, and economic growth rate. In this context, government deficits and debt in several ECCU member countries appear unsustainable, posing a risk to the stability of the currency union. A critical issue facing member countries is to implement fiscal policies consistent with sustainable public finances and debt to underpin the currency union.

Series:

Working Paper No. 2003/162

Subject:

Economic integration Fiscal policy Fiscal stance Government debt management Monetary unions Public debt Public financial management (PFM)

English

Publication Date:

August 1, 2003

ISBN/ISSN:

9781451857894/1018-5941

Stock No:

WPIEA1622003

Pages:

34

Please address any questions about this title to publications@imf.org