'NO EASY TASK' - Holness eyes debt-for-policy swaps, urges innovative thinking to spur economic growth
A crippling debt burden militating against the efforts of Caribbean countries to attain economic growth has pushed Prime Minister Andrew Holness to propose the implementation of debt-for-policy swap initiatives in the region.
Holness was addressing the 46th Annual Meeting of the Board of Governors of the Caribbean Development Bank (CDB) in Montego Bay, St James, yesterday.
According to Holness, while the region has made progress in terms of its development, it nonetheless finds itself in challenging and uncertain times as its advancements have not always been financed through productivity and economic growth.
"After approximately 50 years of independence as a region, the Caribbean has recorded impressive developments in an array of social and economic indicators such that the region has graduated to a category, as classified by international development institutions, where it no longer qualifies for certain types of assistance," he said.
"Much of our development has been achieved at the expense of the accumulation of debt, and this is certainly the case for Jamaica as it is for other member countries of the CDB," continued Holness.
"Indeed, a common characteristic of the economies of CDB member states is the unsustainably high levels of debt to GDP. These high levels of debt pose an existential risk to our economies and have the potential to retard, and even reverse, social and economic development."
Holness said the region's growth ought to be led by what he termed "a risk-taking and dynamic private sector" as it cannot be stimulated by counter-cyclical spending.
He said, as a result, the region's governments need to pursue policies that improve the enabling environment to attract local and foreign investment.
"This is no easy task, and the CDB has a crucial role to play in the transformation in thought and policy required ... . They (debt reduction and growth) won't be achieved through conventional thinking and incremental measures... while debt forgiveness is not on the policy menu, debt-for-policy swaps could be," the prime minister stated.
"While we rely on foreign investment for growth, we must also concentrate resources on policies that transform our domestic economies - policies that reduce public bureaucracy, reform our tax systems, promote economic efficiency, broaden access to finance, and ensure financial inclusion."
The prime minister also called for the CDB to focus on strategies for the diversification of the regional economy consistent with the region's competitive advantages.
"The CDB has a role, too, in helping the region think through reform to its institutions that favour increased trade among its member states and policies that maximise the use of our productive assets, chief among which is our people," said Holness.
"Many of our economies are on the cusp of transitioning from developing status but are threatened by the twin challenges of high public debt and structural vulnerability. We must resolve to do all we can as a region to respond. We must galvanise our thoughts and action towards implementation of meaningful and responsible reform. As we do so, however, we must seek avenues to incorporate the assistance of our international development partners who have stood by us in tough times in the past," Holness added.