by Clive Bacchus
St Kitts and Nevis (WINN): Governor of the Eastern Caribbean Central Bank (ECCB) Timothy Antoine is reporting that estimates for the Eastern Caribbean Currency (ECCU) show deficits of $1.5 billion and $1.0 billion in 2020 and 2021, respectively due to the global pandemic.
The anticipated financing gap for 2021 is about $2.1 billion.
‘This trend of widening fiscal deficits and rising debt is expected to continue into the medium term (2-3 years), as countries continue to implement policies to protect their citizens and until Tourism recovers,’ he stated in a recent blog ” Another lesson from the COVID-19 pandemic: Fiscal Buffers are essential”.
The ECCU Debt to GDP ratio has jumped from 67.2 percent at the end of 2019 to 85.6 percent at the end of 2020 – an 18.4 percentage-point increase – thereby wiping out all the hard-earned gains of the past eight years and according to the Central Bank Governor, ECCU governments contracted an additional $1 billion of debt in 2020.
That money, Mr. Antonie says, helped to plug massive financing gaps as the government revenue plummeted by 50 percent in some countries
“This precipitous decline reflects the 65.4 percent drop in visitor expenditure to $2.4 billion in 2020 from $6.8 billion in 2019.
Additionally, it reflects the fall in demand for economic citizenship, the dominant driver of non-tax revenue in some countries.
At present, the IMF projects that Tourism in the Caribbean will not return to pre-pandemic levels before 2024.