‘Busi­ness as usual’ ap­proach in Caribbean will see debt soar - Com­mon­wealth re­port

The Star (St. Lucia) - - LOCAL -

On its cur­rent devel­op­ment path, the Caribbean in 2050 will face un­man­age­able debt, poor growth, and greater so­cioe­co­nomic prob­lems, warns a Com­mon­wealth re­port launched on Thurs­day at the Fourth Global Bi­en­nial Con­fer­ence on Small States in Sey­chelles.

The re­port, Achiev­ing a Re­silient Fu­ture for Small States: Caribbean 2050, con­sid­ers cur­rent poli­cies and trends in six Caribbean coun­tries - Ba­hamas, Bar­ba­dos, Ja­maica, St Lu­cia, Gre­nada, Trinidad and Tobago and Guyana - and makes a 34year pro­jec­tion across dif­fer­ent sec­tors. The re­search shows five out of the six coun­tries would have a debt-to-gross do­mes­tic prod­uct (GDP) above 100 per cent – dan­ger­ous lev­els if growth con­tin­ues to lag. Pro­jec­tions also sug­gest in­ter­est ex­pen­di­ture on debt is likely to sap pub­lic fi­nances, re­duc­ing funds for devel­op­ment and giv­ing rise to greater so­cio-eco­nomic prob­lems.

The Caribbean faces mount­ing chal­lenges, ac­cord­ing to the re­port, and un­less there are seis­mic shifts in pol­icy-mak­ing, the out­look is stark. Slug­gish growth, spi­ralling debt, high youth un­em­ploy­ment, ris­ing crime rates, piece­meal in­vest­ment and low pro­duc­tiv­ity all pose se­ri­ous threats to the re­gion’s fu­ture. Cli­mate change also casts a long shadow; small is­land de­vel­op­ing states are most vul­ner­a­ble to ex­treme weather, ris­ing sea lev­els and di­min­ish­ing nat­u­ral re­sources but lack the funds to plan ahead and min­imise risks. The re­port chal­lenges the sta­tus quo and sets out pol­icy in­ter­ven­tions in tar­geted ar­eas aimed at tack­ling per­sis­tent bar­ri­ers to the re­gion’s growth.

“This pub­li­ca­tion of­fers strate­gies that seek bal­ance for the Caribbean in the sur­viv­abil­ity of to­day and the sus­tain­abil­ity of tomorrow,” said Com­mon­wealth Deputy Sec­re­tary-Gen­eral Deo­dat Ma­haraj. “We have taken on board cur­rent and fu­ture threats fac­ing the re­gion, such as lack of com­pet­i­tive­ness, hu­man and fi­nan­cial re­source con­straints, crip­pling debt and lim­ited ac­cess to devel­op­ment fi­nance and put for­ward prac­ti­cal steps that set out a new tra­jec­tory to help re­alise the full and rich po­ten­tial of the re­gion.”

So how can the re­gion trans­form? The re­port pro­vides rec­om­men­da­tions on pro­duc­tiv­ity, ex­port growth, in­creas­ing youth em­ploy­ment and fis­cal re­form. Find­ings show a two per cent a year in­crease in pro­duc­tiv­ity would have the great­est im­pact on devel­op­ment and growth among the Caribbean coun­tries pro­filed. And if a re­gional fo­cus on pro­duc­tiv­ity is com­bined with poli­cies aimed at stim­u­lat­ing ex­port growth, the re­port points out, it is likely growth and debt tar­gets set by gov­ern­ments will be met.

The is­lands of the Caribbean have made good progress rel­a­tive to their short-lived in­de­pen­dence, the re­port states, but a num­ber of crises brought about by so­ci­etal change, nat­u­ral dis­as­ters and eco­nomic shocks have cre­ated ma­jor set­backs. For ex­am­ple, the re­gion has strug­gled to make progress on devel­op­ment goals be­cause of the pro­tracted eco­nomic down­turn. The re­port at­tributes the over­all de­cline in eco­nomic devel­op­ment to ‘a lack of sys­temic trans­for­ma­tion’ and calls for pol­icy-driven in­no­va­tion in part­ner­ship with the pri­vate sec­tor. It also makes a strong case for deeper re­gional in­te­gra­tion.

“At a time when pol­icy-mak­ers are loathe to look be­yond the short term, this book takes a long view of the pol­icy chal­lenges fac­ing the Caribbean and re­minds us of what could hap­pen if we do noth­ing to­day. In do­ing so, it also ini­ti­ates a much-needed di­a­logue on what might be an al­ter­na­tive sce­nario, and the so­cial and eco­nomic poli­cies that could take us there,” said Wen­dell Sa­muel, an of­fi­cial from the In­ter­na­tional Mon­e­tary Fund at­tend­ing the con­fer­ence.

One of the rec­om­men­da­tions to free up rev­enue and boost growth, the re­port sug­gests, is for Caribbean gov­ern­ments to ac­tively pur­sue sus­tain­able en­ergy sys­tems by in­vest­ing in new tech­nol­ogy and im­prov­ing ef­fi­ciency. Liv­ing stan­dards will in­crease, for­eign in­vest­ment will go up be­cause of lower busi­ness costs and dam­age to the en­vi­ron­ment will go down. This it says will also pro­vide the re­gion with a moral high ground in global cli­mate change ne­go­ti­a­tions and sig­nal to the rest of world that tran­si­tion­ing from fos­sil fu­els to re­new­able en­ergy is in­deed pos­si­ble.

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