BASSETERRE, St Kitts, – The Monetary Council of the Eastern Caribbean Central Bank (ECCB) is suggesting that regional countries take policy measures including bulk purchasing, improving inter-island trade, and conserving energy to address the rising cost of living.
These were among the suggestions made at the council’s recently concluded 61st meeting in St Kitts and Nevis, held under the chairmanship of the Honourable Victor Banks, Minister of Finance of Anguilla.
After considering a joint report by the ECCB and the OECS Inflation Working Group (IWG) on the issue of high and rising prices in the member countries, the council noted that the region had to accept that that the inflationary pressures were largely the result of global pressures.
“The Council accepted the view that since the root cause of the inflation was largely exogenous, the optimal interventions would have to be targeted at enhancing the resilience of the economies to external shocks,” the report indicated.
Drawing reference to policy initiatives already being undertaken by member countries, the Council agreed to recommend to member governments a number of short-term measures including programmes to assist the most vulnerable groups in society; measures aimed at promoting improved local agricultural production in order to be better able to supply both households and the hotel sector and public awareness campaigns to educate the general public on the causes of inflation.
It also suggested medium to long-term initiatives.
Among these were bulk purchasing of commodities at an OECS level in a similar manner to that currently used for the joint purchasing of pharmaceuticals under the OECS Pharmaceuticals Procurement Service; a local and regional energy policy geared at conserving energy; greater flexibility in the labour markets to allow for the free movement of skilled labour which would help to contain inflation caused by wage pressures; increases in productivity; establishment of Tripartite Committees to discuss issues related to wages, prices and productivity; and establishment of an OECS Distribution and Transportation Company to address the deficiencies in inter-island trade by forging greater distributional links throughout the islands and providing fast and reliable transportation services for goods.
The Council added that it “welcomed the further work which would be undertaken in collaboration with the IWG to conduct research on the methodological issues in the compilation of consumer price indices in the ECCU, with a view to making recommendations for improvements.”
Meantime, in other discussions at the St Kitts meeting, the Council indicated that member countries of the Eastern Caribbean Currency Union (ECCU) should expect the slowdown in growth recorded in 2007 to continue this year.
“Economic activity in the ECCU continued to expand, though at a slower rate than in the corresponding period of the previous year and growth in 2007 was underpinned primarily by activity in the construction and transport sectors,” it reported.
“The slowdown in growth in the ECCU economies is expected to continue in 2008. Growth will be driven largely by construction activity.”
According to the Council prospects for the major foreign exchange earner, tourism will be influenced to some extent by the projected slowdown in the United States economy. But it added that the continued depreciation in the US dollar should have a positive impact on visitors from Europe.
Monetary and credit conditions are also expected to remain favourable.
