ECCB 2014-2015 Annual Report and Statement of Accounts

EASTERN CARIBBEAN CENTRAL BANK

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (expressed in Eastern Caribbean dollars) March 31, 2015

2.

Summary of significant accounting policies …continued

s) Employee benefits …continued

Staff pension plan ...continued

The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of long-term government bonds that are denominated in the currency in which the benefits will be paid, and which have terms to maturity approximating the terms of the related pension liability. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised immediately in other comprehensive income. Past-service costs are recognised immediately in the consolidated statement of income or loss.

The pension plan is funded by payments from employees and the Bank, taking into account the recommendations of independent qualified actuaries.

Prepaid employee short term benefit

The Bank facilitates loans to its staff at rates that are relatively low in comparison to the normal market rates in the Eastern Caribbean Currency Union (ECCU). These loans are recognised at fair value using a normal market rate, and the difference between the fair value and the consideration given to the employees is recorded as a pre- paid short term employee benefit. The pre-paid short-term employee benefit is amortised through the consolidated statement of income or loss over the expected service life of the relevant individual employees or the expected life of the relevant individual loans, whichever is shorter.

t) General reserve

The Eastern Caribbean Central Bank Agreement Act 1983 – Article 6(3) (as amended) provides that “if and so long as the general reserve is less than 5% of the Bank’s demand liabilities at the end of a financial year in which net profits were earned the Bank shall allocate to the general reserve one half of such net profits or such smaller amount as will make that reserve equal to 5% of those liabilities; provided however that with the written agreement of each of the participating governments further allocation may be made to increase the general reserve beyond five per cent but not more than ten per cent of the Bank’s demand liabilities.” For the year ending March 31, 2015 an amount of $12,034,925 was transferred from the General Reserves to cover the deficit position of the Bank. In 2014, an amount of $9,219,892 was transferred from General Reserves to partially cover the deficit position of the Bank. At March 31, 2015, the general reserve ratio stood at 2.81% (2014: 3.46%) which is 2.19% (2014: 1.54%) below the 5% target.

68

ECCB ANNUAL REPORT 2014/2015

Made with