The STAR Busi­ness­week

The Star (St. Lucia) - Business Week - - INTERNATIONAL FINANCE CORPORATION - BY CHRIS­TIAN WAYNE – ED­I­TOR AT LARGE

Un­lock­ing fi­nance for growth in the con­text of a less favourable global econ­omy is key for Caribbean coun­tries, many of which are fac­ing gaps in fi­nanc­ing, heavy debt bur­dens, and high vul­ner­a­bil­ity to eco­nomic shocks and nat­u­ral dis­as­ters. In 2014, Saint Lu­cia’s then-Prime Min­is­ter Kenny An­thony hosted the third re­gional Caribbean Growth Fo­rum to dis­cuss new strate­gies and tools to achieve growth in the Caribbean. Few of these strate­gies have since ma­te­ri­al­ized, but nev­er­the­less, one key take-away from the dis­cus­sions in Saint Lu­cia was that be­ing small has a num­ber of ad­van­tages. Go fig­ure. For in­stance, small states can be more ag­ile in en­sur­ing high com­pet­i­tive­ness. For ex­am­ple, a num­ber of small states con­tinue to rank at the top of the an­nual Global Com­pet­i­tive­ness In­dex in­clud­ing Sin­ga­pore, Mau­ri­tius and Malta. Given the large debt bur­dens faced by many Caribbean coun­tries, fi­nanc­ing growth calls for com­bin­ing pub­lic and pri­vate fi­nance.

To free up greater pub­lic fi­nanc­ing for growth, con­tin­ued ef­forts on fis­cal con­sol­i­da­tion and struc­tural re­forms are es­sen­tial. But high debt bur­dens also stem from weak com­pet­i­tive­ness, low pro­duc­tiv­ity, low skill lev­els, high logistics costs and poor con­nec­tiv­ity. In this con­text, Caribbean gov­ern­ment must com­mit to a path of fis­cal re­form and pri­vate-sec­tor led de­vel­op­ment. Work­force de­vel­op­ment is cen­tral.

Since 2014, how­ever, the Caribbean’s fi­nan­cial ecosys­tem has been un­der siege by the con­stantly mov­ing goal­posts of global bank­ing com­pli­ance re­quire­ments, most of which un­der­pin the Caribbean’s bank­ing re­la­tion­ships to the metropoles of the world. While com­bat­ting the fi­nanc­ing of ter­ror­ism, il­licit trade, and transna­tional crime are com­mend­able pur­suits, stand­ing ‘hard against crime’ shouldn’t be used to jus­tify the sev­er­ing of key av­enues for Caribbean growth and poor pol­icy-mak­ing.

In this bank­ing and fi­nance themed edi­tion of The STAR Busi­ness­week, we’re get­ting un­der the hood of the Caribbean fi­nan­cial sys­tem, look­ing at where we are to­day, and what we’re do­ing to move for­ward.

It’s Noth­ing Per­sonal. It’s Busi­ness.

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