Sun | Oct 24, 2021

CARICOM SG wants debt reduction as part of post COVID-19 response

Published:Wednesday | October 6, 2021 | 3:04 PM
Barnett said that debt reduction should specifically address debts built up due to COVID-19 expenditures and climate change adaptation. - Contributed photo.

BRIDGETOWN, Barbados, CMC –Secretary-General of the Caribbean Community (CARICOM), Dr Carla Barnett, says an effective response to the post coronavirus (COVID-19) economic situation must include significant and broad debt reduction for all developing countries.

Barnett told the ongoing 15th Session of the United Nations Conference on Trade and Development (UNCTAD) that this approach should also be applied to vulnerable middle to high income states.

Barnett said that debt reduction should specifically address debts built up due to COVID-19 expenditures and climate change adaptation.

She said that the meeting provided an opportunity to highlight to the global community the issues and concerns of Small Island and Low-lying Coastal Developing States (SIDS) as well as to identify some of the measures that could be taken by the international community to support efforts to build resilience and promote sustainable development among SIDS.

She told the panel discussion that SIDS experienced gross domestic product contraction in 2020 at about three times the global rate.

“We applied funds that were budgeted for other purposes to meet the needs of the health sector for PPEs, medical equipment, testing supplies and vaccines. We shifted funds to meet basic social safety nets. We repurposed loans and borrowed additional funds. Already high debt burdens grew even higher,” Barnett said.

She said that while the G-20 Debt Service Suspension Initiative (DSSI), which allowed developing countries to temporarily suspend debt service payments to their official bilateral creditors, had potential, it did not cover all middle to high income developing countries, many of which are SIDS.

“New debt arising from the need to address the COVID-19 crisis together with the existing debt stock will continue to appropriate a significant proportion of public resources in debt repayments while strangling critical infrastructural public investments required for economic rehabilitation.”

She said that the situation was even more challenging for many SIDS as they cannot access multilateral and bilateral concessional aid financing because of their relatively high per capita income status.

“With the reality of our vulnerabilities exposed by the COVID-19 and climate crises, the call for a more appropriate basis for determining access to concessional financing takes on great urgency.”

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