By Kevon Browne
St. Kitts and Nevis (WINN) – The Eastern Caribbean Central Bank (ECCB) has recorded a financial loss for the first time in six years.
In the 2021-2022 annual report and statement of accounts published on June 30 for the financial year that ended March 31, 2022, the financial institution recorded a net loss of EC$49.1 million.
The previous financial year ended with a EC$25.2 million profit.
According to the report, the Governor of the ECCB, Timothy Antoine, says the loss resulted from the impact the economies of the Eastern Caribbean Currency Union (ECCU) felt from what he described as an “unprecedented and complex” global economic and geopolitical environment.
Namely, losses on foreign investment securities and a decline in interest income earned on foreign reserve assets, as interest rates globally remained at historically low levels over the year.
However, the Governor 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. Meaning currently, the value of the EC dollar has not decreased.
The ECCB serves as a central bank for Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts- Nevis, St. Lucia, and St. Vincent and the Grenadines.
On the heels of the COVID-19 pandemic and the road to recovery, ECCU countries began re-opening commerce for economic recovery but were hit with other setbacks.
With this net loss, the new fiscal year for the central bank has started with more challenges if you consider the social, political and economic climate of the world on the verge of a global recession as countries battle rising inflation, food security policies becoming more nationalist and protectionist, energy policies going through changes because of the rising cost and scarcity of fuel and the continued war between Russia and Ukraine.
The report reads, “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.
In January, before the war in Ukraine, the International Monetary Fund (IMF) projected global economic growth of 4.4 percent for 2022. Three short months later, that figure shrank to 3.6 percent, primarily due to the impact of the war in Ukraine.
What about the region’s expected growth?
“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,” reported Antoine.
While Governor Antoine acknowledges the challenges in the report that will shape the Bank’s direction for the new year, he shared that innovation, experimentation and reforms will be escalated.
The report also outlines other factors that contributed to some of the other challenges expected to face the Central Bank this financial year, including climate change and the possible impact of natural disasters on the region.
The Bank seeks to move proactively on several initiatives to improve its performance in the current financial year, including; the launch of the operations of the Eastern Caribbean Credit Bureau; the development of new data protection legislation for the region and more to foster innovative solutions, and urgent collective action needed to overcome the obstacles to recovery.