By Ken Richards
BASSETERRE, St Kitts (WINN) -- Grenadian trade unionist Chester Humphrey has warned that deteriorating economic circumstances in St George’s and the rest of the OECS could force a devaluation of the Eastern Caribbean (EC) dollar.
“The OECS economies are facing grave challenges, and if we are not careful we may be forced into a situation where we may eventually have to devalue the EC dollar,” Humphrey warned.
He cited Grenada as an example of an OECS state having “high debt, falling government revenues, and the state is unable to finance its way”.
However, two keen observers of economic affairs in the sub-region disagreed that the declining economic situation in the OECS will force the Eastern Caribbean Central Bank to devalue the EC dollar.
One of the two, financial analyst Schneidman Warner, argued that devaluing the dollar will not benefit St Kitts and Nevis and other members of the OECS grouping.
He says one of the reasons why a country devalues its currency is “in order to attract increased exports to make it more affordable for people to buy things from you”.
Schneidman says most of the OECS countries have significant trade deficits and do not export many goods.
Vincentian broadcaster Jerry George acknowledged that the economies of the OECS states are in trouble; however, he does not agree that this will necessarily lead to devaluation.
George warned, though, that the OECS countries must take steps to ensure that they can continue to support the dollar.
“We will not be able to continue to support the dollar at 2.71 EC dollars per US, that’s clear, unless we fix the problem,” he told WINN FM.
Republished with permission of West Indies News Network