Governments urged to cut spending instead of increasing taxes
The Caribbean Develop-ment Bank (CDB) is proposing that regional governments focus on improving tax administration, seeking cheaper financing and also cutting back on spending instead of increasing taxes.
Dr Justin Ram, director of economics at the CDB, said that the bank anticipates further strengthening of regional recovery in 2015, lauding efforts which have contributed to the easing of "onerous debt burdens".
However, Ram, in a report for the bank's annual publication, Caribbean Economic Review, released last week, cautioned regional governments to "stay the course" or deepen reforms where necessary. These include incorporation of fiscal rules to entrench discipline and improvement of tax administration rather than increasing taxes.
He also called on regional governments to increase expenditure efficiency, including through rationalisation of subsidies - for example, on fuel - and proper targeting of social-protection programmes.
The economist also wants them to prioritise investment in, and maintenance of key social and economic infrastructure, as well as social safety nets and citizen security initiatives.
Improve debt management
He advised local planners to improve their debt management strategies to "focus on sustainable sources of concessional financing, and enhance national savings rates and fiscal sustainability".
Ram also suggested that regional governments invest in economic infrastructure and human capital, since these will provide the platform for sustained and inclusive future economic growth.
Governments must also put in place reforms to allow the private sector to thrive and to boost economic growth, he said.