While the Eastern Caribbean dollar has remained “strong despite the pandemic”, the risks facing the currency union amid unprecedented global economic pressures are “grave”.
That’s the word from the Governor of the Eastern Caribbean Central Bank Timothy Antoine. He was speaking recently as the eight countries which use the currency marked the 46th anniversary of the EC dollar being pegged to the US dollar.
The conflict in Ukraine has upended the fragile economic recovery from the Covid pandemic. Together they have triggered soaring inflation and significant disruption to supply chains – and the Caribbean has been feeling the brunt along with the rest of the world.
“At this moment the outlook for the global economy is far from certain but the immediate outlook is not good and the implications for our currency union are grave,” Antoine warned.
“Our working assumption is that current inflation could last another 12 months, perhaps even longer.
“Some of that has to do with the war in Ukraine and at this point we do not know when that war will end. Consequently, we must govern our affairs accordingly.”
The EC dollar has been pegged to the US at a rate of EC$2.7-US$1 since July 1976. In addition to Antigua and Barbuda, it is the currency of Dominica, Grenada, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Anguilla, and Montserrat.
Antoine said the EC dollar had enjoyed “46 years of stability, even in this pandemic – and even in hurricane and volcanoes and through inflation, our EC dollar remains strong”.
He said collective action now would ultimately determine the fate of the currency union.
“The pressures on all sectors and social partners are real and mounting. We must come together at all levels,” Antoine urged.
“We have seen things we have never seen, in terms of inflation for example.”
He added that all nations in the region must unite and “engage in meaningful dialogue” and discuss “shared sacrifices to weather the current inflation storm”.