CARICOM Heads of Government have agreed to an immediate programme of assistance to Dominica worth US$20M, a short-term stabilisation plan for the region as a whole, and a regional economic transformation blueprint to halt the economic slide in the Caribbean.
Guyana is a member of the team to review and evaluate the macro-economic situation in Dominica, at present the most severely economically affected member state, and to devise and implement a programme of stabilisation for the country.
In a communique issued at the end of the two-day meeting in St Lucia last week, the heads agreed to a framework for treating problems facing Caribbean economies in both the short and long term. The short term problem results from declining performance in both the traditional and non-traditional sectors and is seen in declining rates of growth in real output, stagnation in holdings of foreign reserves and rising fiscal deficits.
The St Lucia meeting, chaired by Guyana’s President Bharrat Jagdeo, was held to deal with the economic situation in the region which has been reeling from a decline in travel and tourism, on which the region has been heavily dependent, following the terrorist attack on the US on September 11 last year. The meeting was a follow up to the Heads of Government meeting held in Georgetown last month.
In dealing with the immediate fiscal difficulties and infrastructural and transformation problems which Dominica faces, the Heads agreed to provide technical assistance to Dominica in reviewing and evaluating the macro-economic situation and in devising and implementing a programme of stabilisation.
The team, which will look at the situation in Dominica would comprise representatives from The Bahamas, Barbados, Guyana, Jamaica, Trinidad and Tobago, the Caribbean Development Bank (CDB), the Eastern Caribbean Central Bank, and the CARICOM and OECS Secretariats. The team will meet at the CDB head office in Barbados on Friday.
The Heads have also agreed to provide through their central banks or other appropriate sources, at least US$20 million in assistance which should close the immediate financing gap; provide technical experts to assist Dominica to review sources of financing currently available to the country; identify constraints to the drawing down of such resources and ensuring early access to the funds. The experts will also manage and implement programmes and projects and manage the debt.
The short term stabilisation fund is meant to cushion serious macro-economic problems and the effects of external conditions that other CARICOM states are either confronting or will confront due to external conditions facing the region.
To alleviate or forestall these possibilities, the Heads agreed to establish the Regional Stabilisation Fund which would be supported by an appropriate level of investment by each Central Bank or other sources. The fund will be so organised as not to impair the overall earning capacity of the central banks.
In this regard they also agreed to establish a technical team to review and assess international and regional resources available to CARICOM countries, constraints to accessing such resources and to develop strategies to remove the constraints. The technical team would also devise appropriate programmes of stabilisation.
Where applicable the Heads agreed that Member States would among other things identify their domestic circumstances, with specific attention to establishing the size of any resource gaps; immediately review expenditure commitments and programmes with a view to determining activities which could be postponed or terminated; develop mechanisms to advance the collection of outstanding and current revenues; and prepare an inventory of all available resources, particularly external resources, with a detailed statement of the conditionalities and access arrangements attaching to each.
They agreed to implement a systematic programme of reduction of payments arrears to domestic suppliers and individuals; to establish and maintain an open and transparent public finances management system including publicly accessible budget debates; pay urgent attention to reducing the level of outstanding debt and to restructuring the terms of commercial borrowing; and closely examine the operations of public enterprises and other parastatal bodies, particularly those which utilise Central Government resources via transfers or other mechanisms, with a view to early decisions regarding their future.
They also agreed to arrange for the proper structuring of social security scheme investment portfolios to ensure the capacity of these schemes to maintain solvency and liquidity; to attend to the creation and effective operation of safety net arrangements to minimise the adverse impacts of the adjustment programmes on the most vulnerable groups in society; examine revenue systems, including both tax structure and administration; conduct a detailed examination of the structure of the public sector and the ways in which government services are provided; and conduct public consultations.
They agreed, too, to significantly strengthen or re-establish public sector investment programming systems. This mix of policies would work to prevent, or make very difficult, a subsequent reversion to the current state of affairs, unless all the influences promoting deterioration were external and irresistible.
Where individual member states do not have the capacity to undertake the activities, assistance would be provided by other member states and or regional institutions.