Regional gov’ts and private sector urged to collaborate more
President of the Caribbean development Bank (CDB), dr Gene Leon, has called on regional governments and private sector to form greater bonds to strengthen the resilience of economies.
Speaking on Taking Stock with Kalilah Reynolds recently, the CDB president said the current relationships between the public and private sectors across the Caribbean continue to hinder diversification, which the states need in order to be better prepared for shocks.
He was speaking against the background of the impact of the novel coronavirus pandemic on small island developing states, which he noted had only made a terrible situation worse. “We had problems before COVID-19 and we should not see it as though we were squeaky clean before,” he said. “If there is a willingness from the private sector and there is complementary support from the government or public sector and they see themselves as working jointly or collaboratively towards meeting one common goal of building economies that are resolute, resilient, or will provide opportunities for their people, then that is what I think we would have now,” said Dr Leon.
Bridging the digital divide
At the same time, the president said the focus should not be on backing specific industries for diversification, but to pool efforts to meet specific goals. Pointing to the need for regional economies to become fully digitised, Dr Leon said the bank would be willing to support any of the industries that, when bundled together, would help to bridge the digital divide across nations, instead of investing in specific industry-related players, such as telecommunications and regulatory authorities.
“As a lender, what you want is a request for funds that you are going to assess in regards to viability and a development goal. When you have those two aligned you make a decision and you say, ‘ Yes, I’m willing to enter that particular space,’; that’s not the same as saying I’m going to back a particular industry, come what may,” he reasoned.
Dr Leon said the COVID-19 crisis should serve as a wake-up call to countries in order to prevent the same outcomes from being repeated. He said countries in the region continue to be challenged by low export concentrations, a situation that also impacted rebound figures for Caribbean economies following the 2008 global financial crisis.
“People still see the mono export or few export markets as the holy grail as how we will live… The only way we can pivot is to look for ways in which we can tackle the issue of market resilience... that way, when you have shocks, when things hit you, you have enough in terms of a buffer to at least be able to manage one way or the other,” he said.
rescue, recover, rebuild
In the meantime, the CDB president said the bank has developed a three-pronged approach to assist countries to navigate the fallout from the pandemic.
He said the region remains at the rescue stage, which involves identifying the level of support needed and executing tasks relating to social protection. The purchasing of vaccines also forms part of the rescue phase.
He said there’s also the recovery mode, where countries will start to project a return to growth in gross domestic product (GDP). The final mode revolves around rebuilding, which Dr Leon said will see countries positioning themself for longer-term growth.
“We’re still in rescue mode because, for example, we’re looking in terms of the interest relief, debt repayment , where for the CDB member countries in greater need, we are able to allow them to get relief by not having to pay principal and interest for a year to give them that relief from the added expense that they need to meet – [domestic] Covid-19-related expenses,” said Dr Leon.
He said there are also governments like St Vincent and the Grenadines seeking emergency support for other disasters outside of COVID-19. “There will be those that will be looking for assistance with the budgets and that is assistance moving into recovery mode,” he said.
Dr Leon said it could take years before countries emerge from this make-up phase, evidenced by the magnitude of the fall in GDP growth that occurred in 2020.
Meanwhile, with the 2021 Atlantic hurricane season also starting to threaten regional economies, Dr Leon said the bank has started thinking about contingency plans should the region experience severe setbacks from hurricanes this year. He said, as the Bank does not have the resources to meet every eventuality, they will be looking to advocate for additional financing from the traditional institutions that provide “umbrella” coverage for catastrophes when they occur.
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