McPherse Thompson, Assistant Editor - Business
PORT OF SPAIN, Trinidad: Finance ministers, central bank governors and senior technocrats from across the Caribbean have been encouraged to eschew parochialism and embrace a broad-based, collective and collaborative response to the economic crises facing the region.
This as the International Monetary Fund (IMF) embarks on a radical reorganization of its policy to tackle the daunting challenges of low growth and high public debt facing Jamaica and its regional counterparts.
Some four months ago, the IMF said Jamaica’s debt had reached 140 per cent of gross domestic product (GDP), 10 percentage points higher than the figure cited by the government, and suggested that it could climb higher unless the government push through fiscal reforms.
The island’s stock of public debt currently stands at about J$1.7 trillion and economic growth has been anaemic.
The job of putting in place policy to lower the debt and propel economic growth partly falls to Finance, Planning and Public Service Minister Dr. Peter Phillips who is this week leading a delegation to a high level IMF-sponsored forum in Trinidad under the theme Rethinking policy to address low growth and high debt in the Caribbean.
The delegation include Bank of Jamaica governor Brian Wynter, who told a monetary policy briefing a few weeks ago that economic growth was flat for the quarter to June 2012 and is expected to remain in that mode for the fiscal year.
Former financial secretary Shirley Tyndall and technical advisor to the minister, Helen McIntosh are also among Jamaica’s delegation.
According to president of the Caribbean Development Bank, Dr. Warren Smith, most of us would subscribe to the view that our world continues to be characterized by deep concerns. He added that the depth and severity of our economic and financial crises pose a clear and present danger to the livelihoods of most Caribbean people.
“For the first time in close to half a century, our region and the rest of the world face a collective vulnerability whose redress requires collective action,” Smith said, while addressing the opening of the forum organized by the IMF, CDB and the government of Trinidad & Tobago at the Hyatt Regency hotel.
Smith made known his view that in the circumstances strategies to tackle the high debt and low growth call for a broad-based, collective and collaborative response to those economic challenges.
Ultimately, to succeed as a region we need to share our burdens and learn from the experiences of our Caribbean neighbours, he said.
Finding appropriate solutions also means that the region has to draw lessons from global experiences. I am therefore heartened that our deliberations over the next few days eschew parochialism and embrace the broader international spectrum, the CDB president said.
Deputy Managing Director of the IMF, Min Zhu said that among the pressing issues being discussed at the forum, which ends today (Wednesday), will be how to boost growth and competitiveness in the Caribbean.
Zhu indicated that in that regard, participants need to concentrate on why growth has been elusive, especially in the tourism intensive countries of the region.
In that context, it will be important to ensure that growth is inclusive, paying attention to the most vulnerable, especially to the high level of unemployed youth.
The forum is also focusing on issues affecting financial sector stability, having regards the global crisis and the emergence of Caribbean countries from their own financial sector predicament.
Against that background, the IMF is urging the countries to retain emphasis on bolstering supervision and regulation of banks and insurance companies to prevent another major crisis as well as to avoid contagion.
In their deliberations on how to lower government debt in the region and ensure fiscal sustainability, the IMF has suggested that participants be cognizant that despite the middle to high income status of countries in the region they were still highly indebted.
Consequently, the forum is also deliberating on ways to build sustainable fiscal frameworks, through structural reforms and fiscal consolidation to lower debt and improve credit worthiness.
The forum was partly organized against the background that, according to Zhu, the global environment is making our jobs as policymakers and advisors especially challenging.
He said downside risks continue to be high, reflecting delayed or insufficient policy action. Moreover, growth prospects in emerging markets have weakened and commodity exporters are vulnerable to declining prices.
Looming on the horizon is also the spectre of rising food prices that could pose a substantial challenge for the Caribbean, given its high dependence on global markets for food.
The high level forum is the second to be hosted by the IMF devoted to the challenges faced by small states, following a similar gathering in Samoa in the Pacific Islands a few months ago.
The forum aims to further the debate on economic policy in the Caribbean and its challenges in a regional context, as well as consider the implications of the challenges of recent global developments.
The gathering includes finance ministers and central bank governors from all member states of the Caribbean Community, from British overseas territories, as well as delegations from the World Bank, International Finance Corporation and the Inter-American Development Bank.