The Eastern Caribbean Central Bank (ECCB) has recorded a financial loss of $10M, for the third consecutive year.
ECCB Governor, Timothy Antoine indicated that all of the bank’s income is derived from interests on the reserves it has.
According to Antoine, ECCB has about $1.8BN in reserves, many of which are in US Fixed Income Securities, and have been earning less than one percent on most of the reserves.
He said that after the great recession, rates have been cut dramatically, becoming zero percent for a long time.
He disclosed that it was only last December the rates were once again raised for the first time in seven years.
“In times past we were getting a lot of income, interest rates were higher. In recent years, the last three years in particular, interest rates have been so low, historically, all time low that that has affected our interest income,” he said.
“That is the primary reason why the bank has been making losses,” he added.
At the end of 2014, the ECCB’s loss was $18M, and in 2015 it was $12M.
Antoine said the bank relies on the income from the reserves to pay salaries and utility bills.
He disclosed that the bank is reviewing its reserved management framework, along with a review of its investment policy.
The ECCB Governor said that as a means of reducing its expenditure, the one and two cents coins were withdrawn from circulation.
He noted that money was lost when the one, two and five cents coins are issued.
In addition, Antoine said the Central Bank has put in place a new telephone system, which would now cut cost when making contact with those countries that it is affiliated with.
That new telephone system now serves as having an internal call when contact is make with the representatives throughout the member-States from thee bank’s head office in St. Kitts.
Antoine said the bank is already seeing a significant reduction in the telephone bills.
On the bright side, the newly appointed Governor stressed that the sub-region continues to have in place a strong Easter Caribbean (EC) Dollar for the past 40 years.
He recalled that the law requires a backing of sixty percent, but last year the EC Dollar was backed around 96.5 percent.
“We continue to maintain a very strong backing of our currency which provides for, not just monetary stability, but confidence, it’s low inflation… and also attractive foreign direct investment,” he said.
Antoine took up the post of ECCB Governor on February 1, 2016 replacing St. Lucian economist Sir Dwight Venner who served in the position for more than 25 years.
Before taking up the position of Governor, Antoine served as director for Grenada on the ECCB Board of Directors for the periods 2002 to October 2005 and January 2008 to January 2016.
Antoine’s 22-year tenure with the Government of Grenada was spent in the Ministry of Finance where he began as a Planning Officer in 1993 and rapidly moved up the ranks under the New National Party (NNP) government of prime minister Dr. Keith Mitchell to Senior Economist before being appointed Permanent Secretary, serving in that position from August 1999 to October 2005 and January 2008 to January 2016.