PORT OF SPAIN, Trinidad, CMC – The Board of Governors of the Barbados-based Caribbean Development Bank (CDB) began a two-day meeting here on Wednesday against the backdrop of calls for a new growth trajectory to help ease the insecurity affecting Caribbean economies.
Newly appointed CDB president, Dr. Warren Smith said economic conditions in the region remained depressed, with only seven countries – The Bahamas, Barbados, Belize, British Virgin Islands, Guyana, St. Lucia and the Turks and Caicos Islands – reporting growth in 2010.
But he said demand for CDB financing was sustained, with approvals of loans and grants reaching approximately US$300 million compared with US$167 million in 2009.
Net transfer of resources- which is disbursements of grants and loans less repayments of principal, interest and charges – between CDB and its borrowing member countries amounted to US$180 million n in 2010, considerably in excess of net resource transfers of US$70 million in 2009.
Smith, the fifth president of the region’s premier financial lending institution, said he expects most Caribbean countries to return to economic growth this year.
“However, the weak fiscal position will continue to be challenging and will require sustained emphasis on fiscal consolidation and careful debt management. Additionally, many of the gains made in the past decade in poverty reduction have been undermined or reversed. There will be increased emphasis on restoring these gains,” he said.
But Smith said that while the Caribbean has witnessed impressive improvements in socio-economic performance over the past five decades, issues about the quality of the education system remain a major concern; sustained growth and development continue to elude many countries; and poverty remains unacceptably high.
He said the region is “displaying a distinct lack of agility in side-stepping the confluence of development challenges that give rise to anxiety amongst our people, that is, a generalised sense of losing control of their destiny in a number of critical areas of social and economic life.
“We can further classify this anxiety under the broad rubrique of “insecurity” – insecurity about their economic situation; insecurity due to the impact of climate change on their lives; and personal insecurity due to rising crime and violence”.
The Jamaican-born CDB official said that the principal economic insecurities currently facing the region have been exacerbated by structural weaknesses and extreme vulnerability linked especially to small size, openness, narrowness of the production base and proneness to potentially devastating natural hazards.
“The economic structure has been further undermined and industry competitiveness challenged by volatile oil prices since the 1970s and the deeper integration of Caribbean economies into the international financial and economic systems through globalisation.
“The signing of the 2008 Economic Partnership Agreement signalled the end of unreciprocated preferential access by Caribbean exports into the European Union (EU) market. New insecurities were created as agriculture production, farm incomes and employment declined; small farmers, especially in banana and sugar producing countries were displaced; and poverty levels rose, and dramatically so, in rural communities.”
Smith said that as the 2008 global economic and financial recession unfolded, and the Caribbean experienced its impact, vulnerability increased.
He said the recent collapse of the Trinidadian conglomerate, CLICO and its subsidiary BAICO reverberated through the region, and resulted in major losses to both institutional and private investors despite rescue efforts of regional governments.
Smith said the impact of climate change is another contributor to insecurity for many Caribbean countries, noting “it is perhaps our single most important environmental and developmental challenge, with worry-some implications for economic growth, development sustainability and our poverty reduction goals.
“Its economic impact is already visible, with damaged and destroyed infrastructure being only one of the casualties. We do not have the luxury of ignoring climate change, for the consequences of inaction are projected to far exceed our income-generating capacity by the start of the next century.”
The CDB president said that another contributor to anxiety in the Caribbean, and which should be given high priority on the development agenda is crime and violence, which he labelled “a growing and seemingly intractable problem. “The incidence of violent criminality has reached almost epidemic proportions in too many Caribbean countries,” he said, recalling figures cited by a World Bank that murder rates in the Caribbean, at 30 per 100,000 population annually, are higher than for any other region in the world.
“The international trade in narcotics seems to be at the root of the upsurge in violent crimes. Also, the economic and social consequences are enormous as rising crime levels generally demand an increase in public expenditures to strengthen the security forces; have a dampening effect on tourism as visitors begin to fear for their safety; stifle business development as new investment and access to financing become constrained; and decimate established communities abandoned by families escaping the effects of gangs, drugs and illegal arms.”
Trinidad and Tobago’s Finance Minister, Winston Dookeran, who also addressed the conference, said that the region should realize that it is no longer “business as usual” when it comes to socio-economic development.
He said there was need for a “quantum leap” into the new global world in which changes are taking place and where economic space is now being fought over by countries that in the past felt they were outside that space.
He advocated the need for a new paradigm in development, describing it as “drilling down” and that the old institutions may have lost their relevance, as he called for a “new realization between public, private and civil society sectors”.
“The real challenge we face will be demonstration that development can’t be imported and a realization we must unearth the entrepreneurship talent of our people,” he said, adding that “drilling down for development forces us to find the right chapter to empower the capacity of our people and executing what has to be done”.
Dookeran, a former Central Bank governor here, said that the much talked about Caribbean integration has become “somewhat elusive on two counts” including the inability to converge the various economies and confronting the new global space.
“The limits of Caribbean integration in its orthodox definition may have been reached,” he said, urging the region to find the mechanisms to meet the challenges of the new regional and global environment.
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