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Fiscal Sustainability and Policy Issues in the Eastern Caribbean Currency Union
Author:
Mr. Anthony J. Pellechio
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Saqib Rizavi null

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Phebby Kufa null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2003: Issue 162
Language:
English
Publication Date:
01 Aug 2003
DOI:
https://doi.org/10.5089/9781451857894.001
ISBN:
9781451857894
ISSN:
1018-5941
Pages:
34
Keywords:
WP; government; country; government dissaving; member government; Fiscal Sustainability; Currency Union; ECCU member country authorities; procurement system; government securities market; government procurement; Fiscal stance; Monetary unions; Government debt management; West Africa; Caribbean; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The fiscal position of the Eastern Caribbean Currency Union (ECCU) has deteriorated significantly in recent years, resulting in sharp increases in public debt. The sustainability of public debt is examined using the public sector budget constraint to derive the maximum public-debt-to-GDP ratio that can be sustained based on a country's projected steady-state primary balance, interest rate on public debt, and economic growth rate. In this context, government deficits and debt in several ECCU member countries appear unsustainable, posing a risk to the stability of the currency union. A critical issue facing member countries is to implement fiscal policies consistent with sustainable public finances and debt to underpin the currency union.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund