Fri 31st Aug 2018
Analysis of the Monetary Union of the Organisation of the Eastern Caribbean States (OECS) by Warrant Officer Ivan O’Neal BSc (hons), MSc, MBA, a graduate in Accounting and Finance and Economic from Oxford Brookes University, England and Leader of SVG Green Party, has revealed that the Monetary Union of the OECS is highly counterproductive to the economic development of SVG.
The EC dollar has been pegged to the United States dollar since 7 July 1976 and the exchange rate is US$1 = EC$2.7.
When the EC dollar was initially pegged to the US dollar, the economic situations of the eastern Caribbean countries, the USA and the world were vastly different to the economic conditions of the present day. Therefore, there is absolutely no logic in having the same exchange rate of EC$2.7 to US$1 from 1976 operating today, 42 years later.
The world economically has changed dramatically since 1976, therefore the exchange rate should be modified accordingly based on the current economic situation. SVG has literally being pushed to the ground under very poor governance by the OECS and being a member of the OECS currency union.
The OECS high exchange rate has contributed to (a) SVG’s high Debt to GDP Ratio of 60% (b) the very high rate of unemployment, hunger and crime in SVG (c) SVG’s food exports being artificially high-priced and thus killing SVG’s agricultural industry (d) the choking of the economy and killing of the SVG economy.
According to Warrant Officer Ivan O’Neal BSc (hons) MSc, MBA, SVG needs must have its own currency and central bank to build a strong and sustainable economy. With our own currency and central bank, we would better able to manipulate the country’s economic conditions and create a more conducive environment in which SVG businesses could flourish.
However, every year we get the usual crap from OECS policy makers in Saint Lucia saying that the high exchange rate of US$1 = EC$2.7 is the flagship for economic growth in OECS. Yet, all of the OECS countries are heavily indebted and have been for decades. So, what are these fools talking about?
In 1965, Singapore and Malaysia broke their monetary union. However, history has shown that the break-up of the monetary union has been a blessing for both Singapore and Malaysia.
Today, Singapore is a World Bank success story with one of the highest standards of living in the world, having its own central bank and own currency. Warrant Officer Ivan O’Neal strongly contends that if SVG had its own currency and its own central bank it would positively enhance economic growth. We must exit the OECS monetary union.
SVG could be the Singapore of the Caribbean if we ditched the white elephant that is the OECS dollar.
SVG is not a banana republic. In 2008, the ULP regime killed the National Commercial Bank with an outrageous overdraft of EC$185 million (source: Audit Report). What is the purpose of the OECS Central Bank?
A Green Government would take SVG out of the OECS Monetary Union, build a central bank and create SVG’s own currency. Our own central bank would be able to set exchange rates and interest rates to keep inflation low and preserve the value of our money. It would contribute to protecting and enhancing the stability of the financial system, and promote and maintain monetary and financial stability for a healthy economy. Monetary stability means stable prices - low inflation - and confidence in the currency.