Governor of the Eastern Caribbean Central Bank, Sir Dwight Venner says that much more coordinated efforts at both the national and OECS levels need to be the hallmark of region policies in 2014.
“We must enlarge our perspectives to realize that while there is a lot to be done within our borders, we will not succeed if we do not combine our efforts across our countries. This is one of the stark realities we must face for in this lies our hope for sustained and equitable development,” he said on Tuesday when he presented the 2013 Eastern Caribbean Currency Union Economic Review.
Addressing nationals of the OECS in a regional broadcast, the Governor said that despite the challenges which faced the region during 2013 preliminary data indicate that economic activity in the member states of the Eastern Caribbean Currency Union expanded at a modest pace of 0.7%, building on the marginal growth of 0.2% achieved in 2012, which reversed the negative growth trends experienced since 2009.
He explained that the increase in economic activity was primarily driven by improved performances in agriculture, construction and tourism. “The construction sector expanded by 2.9% following a 4.3% decline in 2012, as public sector construction gained momentum. In the tourism industry, value added is estimated to have increased by 0.4% due to improvements in major source markets and more intense marketing efforts. However, this rate was lower than the 1.4% growth recorded in 2012,” he said.
Elaborating on the performance of governments, the Governor told the region that the consolidated fiscal position of the Central Government is provisionally estimated to have deteriorated in 2013 as the growth in expenditure outpaced revenue collections.
“An overall deficit of approximately $427.3m (2.8% of GDP) was recorded compared with one of $367.3m (2.4% GDP) in 2012. The deterioration in the overall deficit position reflected the increase in capital expenditure while current expenditure decreased,” he said while explaining that real economic activity in the ECCU is projected to increase by 1.9% in 2014.
The economic activity in the OECS is expected to be supported by higher levels of output in the construction; hotels and restaurants; wholesale and retail; and transport, storage and communications sectors.
“This level of growth is however still below the target growth rate of 3.0 to 5.0%, established by the monetary council as the rate needed to transform the economies, and is unsustainable given the prominence of the non-traceable sectors as the contributors to growth,” said Sir Dwight, who is of the opinion that it may be safe to say that never before has the Currency Union witnessed such a prolonged period of economic stagnation.
The challenges facing developing nations are having severe negative impact on small island states like the OECS, and according to the Governor, governments in the sub-region will have to adopt a strategy of socioeconomic transformation, and require resolute focus on a medium to long term strategy and the political commitment and social consensus to get there.
“We must have a vision of what we want and a systematic, pragmatic and adaptable strategy for achieving our goals. That means that our goals must be clear and measurable with emphasis on: An attainable and sustainable growth rate; higher level of employment in quality jobs; Poverty reduction; and Maintenance and improvement of the Human Development Indices,” he recommends.
He said that each state has a very important role to play in this new dispensation, but it must be complemented by the activities and performance of the private sector and the financial sector.
“The fundamental problem facing governments in small, developing states such as ours is the absolute cost of government. With relatively small tax bases and the need to provide basic services, these states have serious fiscal challenges,” said while explaining that the objective of such states must therefore be to operate low cost and highly efficient and effective administrations.
By Linda Straker
