Remarks by Incoming Chairman of the ECCB Monetary Council, Dr The Right Honourable Keith Mitchell Prime Minister and Minister for Finance, Radisson Grenada Beach Resort, 27 July 2018.
I wish to begin by offering a special welcome to my colleague Council members, the Governor, and our sisters and brothers in the Eastern Caribbean Currency Union (ECCU). We are pleased to host you here in Pure Grenada, the Isle of Spice.
Ladies and gentlemen, brothers and sisters, let me first congratulate my predecessor, the Honourable Roosevelt Skerrit, Prime Minister and Minister of Finance for the Commonwealth of Dominica, on his successful tenure as Chairman, especially after the passage of hurricanes Irma and Maria, which devastated some of our member countries including his very own. Your selflessness and generosity during that very difficult period was a fine expression of your commitment to regional cooperation and solidarity. I assure you of my commitment to support you and the people of Dominica as you continue your long and arduous journey of reconstruction and as you strive to become a climate-resilient country.
I wish to join the outgoing Chairman in commending the Governor and his team on the bank’s overall good performance in the past financial year, which included increased profitability and the launch of its five-year Strategic Plan. I also commend the bank on the progress made with the implementation of its Strategic Plan as captured in its well-designed and colourful Annual Report. Things are indeed looking up.
The Governor has advised that we should expect continued growth in the global economy in 2018 and 2019 and that growth in the Eastern Caribbean Currency Union (ECCU) is projected to improve next year. This is welcome news as we confront the many challenges facing our region. Of course, it is always easier to pursue reforms in an atmosphere of increased economic activity.
Brothers and sisters, during my tenure as Chairman, we will tackle several issues. If I had to summarise our thrust in a single phrase, it would be “implementation for transformation”.
I will like to highlight some of the issues to be pursued:
Fiscal and Debt Resilience
As part of building resilience in the ECCU, we have taken note of the bank’s strong advocacy for the enactment of fiscal resilience frameworks in member countries. Grenada is the first country in the ECCU to adopt fiscal responsibility legislation and establish an independent fiscal responsibility oversight committee. Therefore, we fully support this call.
Grenada has been able to reduce its debt to GDP ratio from a high of 108% in 2013 to 69% at the end of 2017. Grenada is now on track to attain the Monetary Council’s target of 60% by 2020. This puts us well ahead of the 2030 timeline and ladies and gentlemen, we owe it all to the tough but necessary decisions we have taken over the past five years.
It is equally pleasing to note, that Grenada’s economy recorded average growth of 5.8% over the same period of this fiscal turnaround. Grenada stands ready to share its experiences with member countries, because brothers and sisters, we can and must learn from each other.
Last year, the Monetary Council agreed that all member countries would table their Medium-Term Debt Management Strategies in their respective parliaments. It is encouraging to observe that all member countries have now completed their strategies and we look forward to them being tabled in parliament, during my tenure as Chairman.
Brothers and sisters, I also commend the ECCB on its initiative to formally enlist the support of the Paris Forum, the International Monetary Fund (IMF) and the World Bank to develop debt-resilient instruments for members of the ECCU and other small states. This initiative represents a necessary and appropriate advance on the pioneering efforts undertaken by Grenada in 2014 and 2015 to embed “hurricane clauses” in debt agreements with bilateral and commercial creditors.
Dealing with the Threat of De-risking
Brothers and sisters, the potential loss of correspondent banking relations continues to pose a serious threat and we must remain vigilant and relentless in our efforts to combat this existential threat.
In July 2016, our Monetary Council took the important decision to have the ECCB assume responsibility for Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) supervision of entities licensed under the Banking Act. Our banks as well as the international community including correspondent banks, the Caribbean Financial Action Task Force (CFATF) and the IMF, have welcomed this decision.
We applaud the bank’s efforts over the past 18 months to build its capacity in this new area of responsibility. Furthermore, we urge countries that have not yet passed the amendments to facilitate this decision to do so in the shortest possible time.
Equally important are the steps being taken to adopt common standards for countries with Citizenship by Investment Programmes. These efforts ought to be intensified given the importance of these programmes for economic development and financial stability.
Addressing Bank Fees and Charges
Brothers and sisters, the matter of high bank fees and charges is one that concerns our citizens and in fact, all members of the Monetary Council. That said, we also understand that banks are facing rising compliance costs because of various international requirements for Anti-Money Laundering and Combating Financing of Terrorism.
We call on all banks and the ECCU Bankers Association to become more proactive in informing customers of these developments and helping them access no-cost or low-cost options, wherever possible.
It is the Monetary Council’s expectation that a firm will be licensed to operate a credit bureau in the ECCU by the end of this year. This is an important addition to our financial infrastructure and once fully established, it is likely to improve access to credit for our people. To date, three countries including Grenada, have passed the Credit Reporting Bill to facilitate the establishment of the credit bureau. The launch of the bureau next year is predicated on passage by other member countries.
Eastern Caribbean Partial Credit Guarantee Corporation
As members of the Monetary Council, we are keen to see more access to credit for small businesses as development of this sector is critical to job creation and increased economic opportunities.
Now that all six independent members of the ECCU have enacted the appropriate legislation and the inaugural board has been appointed, we look forward to the launch of the Partial Guarantee Scheme in the coming months.
FinTech Regulation and Supervision
As the Lead Prime Minister in Caricom for Science and Technology, I am very cognisant of the role of technology in economic transformation. I applaud the stance of the bank to explore opportunities in respect of blockchain technology. I also look forward to recommendations for collective action to support the expansion of Financial Technology (FinTech) in the ECCU, of course with the appropriate regulatory and supervisory frameworks.
Ladies and gentlemen, brothers and sisters, it is with a great sense of responsibility and optimism about future opportunities for our Currency Union, that I now assume leadership of the ECCB Monetary Council.
I am very mindful of the existing challenges that confront our Currency Union, but as I accept this responsibility, I am equally confident that we will surmount these challenges once we continue to work together and implement the initiatives we have agreed upon. In this regard, we will continue our engagement with the OECS Commission and our social partners.
I will be counting on the support of my fellow Council members, the Governor, the Board of Directors, Management and staff of the bank as we work towards Transforming the Eastern Caribbean Currency Union together.
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