and Mrs Sharmaine Lynch-Harrigan
Last Friday morning, 6th May, the Eastern Caribbean Central Bank (ECCB) hosted a press conference – primarily for local media – so that the public can be apprised of the current state of affairs regarding the bank’s outlook on the economies of its member states, in general, and Anguilla’s economy in particular. Friday’s press briefing was held at the ECCB’s agency conference room in George Hill.
The ECCB regulates and monitors the economies in the Caribbean countries which utilise the EC dollar as their official currency. The member states of the Eastern Caribbean Currency Union (ECCU) are: Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines.
The bank’s Governor, Mr. Timothy Antoine, cordially welcomed the press to the “Country Outreach” conference. He was accompanied by the ECCB’s Country Economist for Anguilla, Mr. Kevin Woods.
Governor Antoine started: “The Eastern Caribbean Central Bank, after a hiatus of two years, has resumed its Country Outreach programme.” Referring to past pandemic restrictions, he said. “We are now cleared to travel again, and our first stop is Anguilla.” He reported that over the past few days, the ECCB delegation had held meetings with the Governor, the Premier, and the Executive Council, as well as the Leader of the Opposition, social partners and local banks. He expressed his pleasure of meeting, as well, with the students and Principal of The Valley Primary School which the ECCB has adopted as part of its school mentorship programme.
The Governor observed: “We are meeting at a time when the world is dealing with some real challenges. Having seen the beginning of a recovery in the global economy at the back end of Covid, we have now come face to face with the war in Ukraine, which is having a chilling effect on the recovery of the global economy. We have seen it directly here in Anguilla – and across the Currency Union – with regard to an increase in prices for food, fuel and fertilizer.”
He noted that due to the Ukraine crisis, the recent projections for potential growth now have to be adjusted downward. “However, having said all of that,” he said, “we still believe that in this challenging moment there are opportunities for our region. And, as a central bank, we want to focus on discovering these opportunities that will help us, not just to go back to an old normal, but to generate a new normal as a higher trajectory for our development.”
The Governor then invited Mr. Kevin Woods, ECCB’s Country Economist with responsibility for Anguilla, to present a progress report on Anguilla’s current economic trends. After introducing himself as an offshoot of Anguillian roots – his mother being a Ruan from East End – Mr. Woods said, “Indeed the pandemic, as well as the war in Ukraine, have had a deleterious effect on Anguilla’s finances and economic growth.”
Looking at the figures for 2020, at the height of the pandemic, Mr. Woods reported that Anguilla’s economy contracted by some 30 percent. He noted: “In 2021, there was some recovery when there was an expansion in economic activity, and it was projected that this favourable trend would have continued in 2022. But now, of course, we are concerned about the effects of the current war in Ukraine – and how that will impact growth prospects going forward.”
He stated that the expansion in growth which was anticipated in 2022 was, for the most part, collaborated by the recovery in the tourism sector after the pandemic. He noted that January was the best month ever, and that this was a good indication of great possibilities for continued economic strengthening, barring an escalation of the protracted Ukraine war — or any catastrophic hurricane.
He also noted that during the pandemic, many businesses in Anguilla were forced to make the hard decision of drawing down on their savings in order to stay afloat while, domestically, persons [who were employed] were able to save because they were unable to travel and they were cautious about their spending patterns.
Now as the economy begins to rebound he said that persons are able once again to borrow against their savings, but in terms of businesses they do not have that privilege to borrow as much because their collateral has been lowered as a result of them drawing down on their savings during the pandemic.
Mr. Woods noted that the pandemic threw a lot of the supply chain offline. “Many businesses had to close down as a result of the plummeting of demand for goods and services,” he said. “Some of these businesses now are struggling to get back online as demand has picked up during the recovery.”However, he observed that the issue of supply chain disruption continues to impact prices of goods and services. Demand for commodities is becoming higher as persons desire now to buy once again, but supply is rather sluggish. And when demand outweighs supply, the economic effect is that prices would rise.
On another note, the Governor Antoine spoke of the Eastern Caribbean Asset Management Corporation which came on stream following the failure of Anguilla’s two indigenous banks, namely the National Bank of Anguilla and the Caribbean Commercial Bank.
“The responsibility of the Asset Management Corporation,” Mr. Antoine stated, “is to buy the banks’ bad loans and to work with the borrower to manage the servicing of these aged loans under certain terms.” He said that the purchasing of bad loans from the bank benefits the bank (NCBA) in that it prevents the institution from having so many bad debts on its books.” In essence, this frees up the bank, thus giving it the ability to make new loans available to its customers.
By the same token, the Governor reflected on the virtues of the banking resolution with regard to the National Commercial Bank of Anguilla (NCBA), and how it has benefitted Anguilla at large. This was after Mr. Ralph Hodge, of Up-Beat Radio, asked him if there is anything he can say to allay the fears of some people who feel that the banking resolution has had a negative effect on both the bank and the people it serves.
Mr. Antoine said: “I would like to ask Anguillians to think back to where we were in 2013…Think about what the options were at the time of the banking resolution. It is true that shareholders in NBA and CCB lost their investments, and that is highly unfortunate. But Anguilla must realise that there was a proposal on the table, presented by the UK Government, which said that depositors should also lose their money. And the ECCB Monetary Council said no!”
He continued: “We would not have supported the idea of depositors losing their money. There were hard choices to be made. But we had to make them. And so, we had to produce the greatest good for the greatest number, and we brought NCBA to life. Today, NCBA is demonstrating to all of us – the people, the government, the bank, the Board of Directors, the Central Bank and others – that what we did with the banking resolution was the right decision.”
On another note, the Governor made mention of digital currency which should soon be introduced to Anguilla. “The digital currency will be launched next month,” he said. “We are working now with NCBA and Liberty Credit Union, and we expect to make an announcement about introducing digital cash soon.” He also spoke concerning the introduction of a Credit Bureau, in Anguilla, to come on stream in November, hopefully, pending the enactment of legislation to support it.
In addition, Governor Antoine mentioned the importance of Anguillians growing their own food, thus contributing to their own food security: “Given what we are seeing right now, with the price of food and the possible shortages because of the war in Ukraine, it becomes even more important for us, as a region, to produce more of our own food. At the moment, at least 80% of the food in this region is imported. That is way too high. And the drivers of this high percentage of imports are meat, cereals and fruits and vegetables.”
He said if we would seriously tackle food and nutrition security, then we need to focus on increasing more of these items. “There is a big discussion going on now in the region to reduce the food import bill by at least 25% over the next three years,” he observed. He said that his hope is that Anguilla would be part of that solution.
The media asked a few questions that provoked a great deal of interest and discussion. Overall, the press conference was an economically enlightening one.
