It also urged the ECCU, the smallest and least known of the world’s currency unions, to use fiscal support measures to reduce public debt and increase tax revenues over the long term.
Following the 2008 global financial crisis, economic recovery in the region has been slow, the IMF said. Growth in 2015 is projected to be 2%, driven by an increase in tourism and low oil prices.
But the fund noted that public debt ratios across the ECCU were expected to stay high despite an improvement to fiscal discipline.
It urged the ECCU to meet the target to reduce debt to 60% of gross domestic target ahead of 2030 deadline as soon as possible. In April, the Eastern Caribbean Central Bank’s monetary council extended the target date from 2020 to 2030 because of slack growth across the ECCU bloc over the past five years.
The IMF said: “Directors agreed that fiscal adjustment should reflect the need to scale back tax concessions, continue to restrain the wage bill, reform the social security system, and improve the performance of state-owned enterprises.
“Deeper regional collaboration in public service delivery could further mobilise budgetary savings. Directors also saw merit in the adoption of fiscal rules to anchor long-term fiscal policy and in additional steps to strengthen public financial management, including as regards revenues from citizenship by investment programmes.”
The currency union consists of Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. The member countries use a common currency, the East Caribbean dollar, which is pegged at EC$2.7169 to US$1.
