ECCU Non-peforming Loan Ratio Highest in the Region

Non-performing loans ratio in the Eastern Caribbean Currency Union stands at 18%, the highest in the entire Caribbean and well over the recommended 5% mark for the sub-region.

The International Monetary Fund (IMF) Regional Resident Representative in the Eastern Caribbean Currency Union (ECCU), Wayne Mitchell made the following observations on the non-performing loans across the region. “In the Eastern Caribbean, the standard is 5% (non-performing loans) with the exception of Haiti and Trinidad and Tobago. All other countries are way above the 5% with the Eastern Caribbean showing the highest non-performing loans ratio as of 2013/2014 at 18%. So that’s extremely high and of great concern,” Mitchell said.

Asked if a lack of adequate supervision of banks and lending agencies, could be blamed for the high percentage of non-performing loans in the Eastern Caribbean. “The global recession, has had tremendous adverse impact on our economies and that has fed through to the banking systems,” Mr. Mitchell noted. He explained that a decline in tourist arrivals, leading to a decline in revenue for both government and private sector, impacts persons’ ability to service loans.

The IMF says that despite the high liquidity of banks in St. Kitts and Nevis and the stability of the financial sector, private sector credit remains weak. Mr. Mitchell offers an explanation as to why this is so. “The issue banks are facing is one of concern in terms of the riskiness of lending and so in an environment which is naturally risk averse, there is a tendency for them to be even more cautious in lending and jeopardising their loans portfolios,” Mitchell said.