Koffie Ben Nassar, Mr. Joel Chiedu Okwuokei, Mike Li, Timothy Robinson, and Mr. Saji Thomas
Weighed down by population aging, slow economic growth, and high unemployment, National Insurance Schemes in the Caribbean are projected to run substantial deficits and deplete their assets in the next decades, raising the prospects of government intervention. With the region highly indebted, this paper quantifies the impact of three parametric reforms—freezing pension benefits for two years, raising the retirement age and increasing the contribution rate by one percentage point—that, if implemented, would put the pension schemes on a stronger financial footing. While the appropriate combination of reforms necessary to eliminate the actuarial deficits varies depending on each country’s circumstances, most countries need to undertake reforms now or risk even higher taxes, lower growth and unsustainable debt dynamics.
The Eastern Caribbean Currency Union (ECCU) has made significant progress in improving the quality and quantity of the macroeconomic statistics it produces and disseminates to the public. The Selected Issues Paper discusses prospects and challenges for credit unions in the ECCU. It reviews the current state of macroeconomic statistics, outlines progress that has been made, and identifies outstanding challenges. It also describes technical assistance to the region and presents the challenges for the production of macroeconomic statistics in small island states.
This Selected Issues paper analyzes the income dispersion and comovement in the Eastern Caribbean Currency Union region. It finds that incomes are diverging, with the Leeward Islands converging to a higher income level than the Windward Islands. The paper examines the macroeconomic impact of trade preference erosion on the Windward Islands and demonstrates the substantial impact from preference erosion on growth, trade balances, and fiscal positions. The paper also analyzes the size of the informal economy in the Caribbean.
Each year natural disasters affect about 200 million people and cause about $50 billion in damage. This paper compares the incidence of natural disasters across countries along several dimensions and finds that the relative costs tend to be far higher in developing countries than in advanced economies. The analysis shows that small island states are especially vulnerable, with the countries of the Eastern Caribbean standing out as among the most disaster-prone in the world. Natural disasters are found to have had a discernible macroeconomic impact, including large effects on fiscal and external balances, pointing to an important role for precautionary measures.
This 2001 Article IV Consultation highlights that in recent years, economy of St. Vincent and the Grenadines has diversified from bananas into services, mainly tourism, telephone and Internet-based marketing, and offshore financial services. However, the rate of economic growth declined sharply to 2 percent in 2000. The external current account deficit is estimated to have doubled to about 16½ percent of GDP in 2001 largely owing to a decline in banana export volumes, higher imports, and a slowdown in tourism receipts and remittances.
This Selected Issues paper on St. Lucia examines challenges facing the Windward Islands banana industry with a focus on the socioeconomic impact and production recovery strategies. The paper focuses on St. Luciathe—region’s largest producer and most populous island. It reviews recent developments in the tourist industry in St. Lucia and its growth potential over the medium term, in an increasingly competitive global tourism market. An overview of developments in the tourist industry in St. Lucia during the 1990s is also presented.
This paper examines interest rate spreads in the Eastern Caribbean and seeks to explain why they are persistently high by comparison with other low-inflation countries. The paper concludes that operating costs appear to be a key determinant of observed interest rate spreads, giving rise to the policy recommendation that efforts to expand the market size of efficient banks might help pave the way for greater efficiency.