PORT OF SPAIN, Trinidad, CMC – As the International Monetary Fund (IMF) prepares to choose a new leader, Finance Minister Winston Dookeran has written to the lending institution urging it to pay more attention to the economic situation facing small developing countries like those in the Caribbean.
“We ask the new leadership of the IMF to give a credible attention and voice to the economic, monetary, and political challenges of small states and their economies,” said Dookeran, who is also chairman of the World Bank Small States Forum.
“While we welcome the improvements made to the lending facilities of the Fund in the last two years (with the introduction of the Flexible Credit Line, the Precautionary Credit Line, the Post Catastrophic Debt Relief Trust and the reform of the concessional lending facilities to Low Income Countries); nonetheless, a gap persists, as concessional financing for small states is still inadequate.”
Dookeran said recent developments in the Caribbean and other regions have shown the additional fragilities and vulnerabilities of small states to natural disasters, the collapse of financial institutions and the concentration of economic activity.
He said issues impacting small economies must be part of shaping the manifesto for the candidates of the IMF.
“In particular, we are concerned that changes to the international architecture in which the IMF and G20 sit, lends itself to a potential contravention of natural justice where clubs of large countries sit and develop rules for smaller states to follow without adequate consultation, consideration and engagement with small states.
“The development of international financial regulation, supervision, risk management and the assessment of financial sectors, does not support a level playing field between small and large states, and that the preferential treatment given to areas important in some large states, from mortgages, regional banks to hybrid capital – treatment that proved so dangerous in the financial crisis – also penalises institutions in small states beyond economic justification.”
He said while small states particularly need help in the financing of infrastructure, the criteria of lending by the multinational institutions is better suited to larger states with capital markets, credit ratings and diversified private-sector players.
“The criteria used for long-term and short-term support pays too much attention to the level of GDP per capita, and not sufficiently to the much higher levels of fragility and vulnerability to natural and economic shocks,” said Dookeran, suggesting that the new IMF leadership should seriously confront those challenges facing the small nations.
The IMF will on June 30 elect a new managing director to replace Dominique Strauss-Kahn who resigned after being accused of sexually assaulting a hotel maid in New York. He’d said he would need all his energy to fight the charges.
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