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CARICOM mulls debt relief

Published:Friday | July 3, 2015 | 12:00 AMDaraine Luton
Sir Hilary Beckles

Caribbean leaders attending the 36th Regular Conference of Heads of Government of the Caribbean Community (CARICOM) in Barbados were yesterday told to pursue debt forgiveness as a means to economic freedom.

Sir Hilary Beckles, vice-chancellor of the University of the West Indies, and Alicia Barcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), forcefully made the case for a coordinated debt write-off plan at the high-level forum, where representatives of the International Monetary Fund (IMF) stressed the need for a coordinated approach by member states.

"I think we have a powerful case and we need to work [on] it together," Barcena said.

She said CARICOM leaders should seek to get powerful mandates from their people and then go in a coordinated way to multilaterals such as the IMF, the World Bank and the Inter-American Development Bank. She said, however, that this must be done in a manner that would not compromise the future lending prospects of the Caribbean.

"Our suggestion is to have a gradual write-off of the multilateral debt. The second option is to have interest payments exchanged for capital investments in their domestic economy," the Mexico-born Barcena said.

"The only way to open up space for financing for development in middle-income countries like the Caribbean is to have debt reduction," she argued.

BOLD ACTION NEEDED

Amina Mohammed of Nigeria, who is the secretary general's special adviser on post-2015 development planning, urged CARICOM leaders to "have the leadership and the courage to put that on the table and push it", and "not have a quiet voice about it".

In 2005, The Paris Club of creditor countries agreed to the outline of a debt-relief package for Nigeria. About US$18 billion of debt was written off and Nigeria outlined plans to buy back a chunk of outstanding loans.

Beckles, who has been carrying the fight for the region in the quest to get reparation from Britain for the ills of slavery to the African people in the Caribbean, believes the case for debt relief is strong.

"The Western world, especially, has extracted so much wealth out of the Caribbean over 500 years. If you take the 18th and 19th centuries, it is Caribbean wealth that was used to balance the budget of Western Europe," Beckles, an historian, said.

He pointed, for example, to the case of Jamaica, which was a British colony from 1655 to 1962, saying it was one of the most dynamic economies in the 18th and 19th centuries.

"When the British walked away from Jamaica in 1962, they left the Jamaican people with 80 per cent illiteracy, and they said, 'Go and develop'. How on earth can any country develop a sustainable economy with 80 per cent illiteracy? The Jamaican people have done very, very well," Beckles reasoned.

Jamaica's Prime Minister Portia Simpson Miller, who is leading a delegation to the conference, listened attentively throughout the session, but did not participate. The country has a debt-to-GDP ratio of 138 per cent and has been required by the IMF to run the world's highest primary surplus - 7.5 per cent - to bring the debt on a firm downward trajectory.

An IMF representative at the meeting, which is being held under the theme 'CARICOM: Vibrant Societies, Resilient Economies', said it appears the Caribbean's message is not getting through to the international community. She has recommended that the governments of the Caribbean make the claim for debt relief in a manner to "convince the international community that this should be undertaken".

daraine.luton@gleanerjm.com