FACING CARICOM'S ECONOMIC CHALLENGES
RICKEY SINGH COLUMN
By Rickey Singh
Guyana Chronicle
March 28, 2004
AS THIS column was being written, Caribbean Community leaders were still addressing issues of fiscal management and economic stabilisation and transformation as part of an agenda of sensitive political matters at their two-day 15th Inter-Sessional Meeting that ended in Basseterre, St. Kitts on Friday evening.
Among some of the Community's leading technocrats in attendance at the meeting were the President of the Barbados-headquartered Caribbean Development Bank (CDB), Compton Bourne, and the Governor of the St. Kitts-based Eastern Caribbean Central Bank (ECCB), Dwight Venner.
The CDB, the region's premier multinational financial institution for financing social and economic development, is currently preparing for its forthcoming annual Board of Governors Meeting in Trinidad's sister island of Tobago.
A former Principal of the St. Augustine Campus of the University of the West Indies, Guyanese-born Bourne had come on board as the fifth President of the 33-year-old CDB in May 2001 with the perspective that the Bank needs to project itself as being capable in offering a more "independent and credible view" in responses to the social and economic challenges facing the institution's constituency of borrowing member countries.
For CARICOM's 23rd regular annual summit in Guyana in 2002, he had made a critical examination of the state of regional economic performance and prospects for the short and longer term.
Weaknesses, or shortcomings in policies and strategies being pursued in both the public and private sectors, were sketched in the best tradition of some of his predecessors who have headed the CDB.
The ECCB's Governor, Dwight Venner, indicated to me in a brief discussion, during the course of the St. Kitts Inter-Sessional, how member countries of the Organisation of Eastern Caribbean States (OECS) were responding to initiatives by the Bank in establishing guidelines for fiscal management in the bank's member states.
But he remains concerned on the need for more collective and vigorous approaches in achieving prudent fiscal management, economic stabilisation and transformation.
At the coming May annual meeting of the CDB, the institution is planning to do more than present the traditional annual descriptive report of the economic performances of borrowing member countries, as well as the institution's own operations over the past year.
This time, the Board of Governors, some of them Heads of Government and Ministers of Finance, are also expected to be provided, I understand, with a document featuring a more analytical assessments of fiscal and economic performances that may not be flattering to some of its borrowing member countries (BMCs).
The intention, ultimately, is for the CDB to evolve, as a matter of policy, to provide on a regular basis critical perspectives on fiscal management and economic planning similar to that often offered by the international financial institutions.
The responses of the CDB's Board of Governors to such an initiative, as well as ideas to be generated in discussions to increase the Bank's capital resources, replenishment of its Special Development Fund (SDF), as well as the focus on a new four-year Strategic Plan to come on stream from 2005, will be quite relevant to enhancing the Bank's role as a more vital and integral partner in the region's development efforts.
Currently disbursing some US$150 million in aid to its member countries, with the OECS sub-region benefitting more significantly, in accordance with a longstanding policy, the CDB is placing much emphasis on increasing its SDF resources, especially in the context of a more systematic and effective response to poverty reduction, a problem that confronts a great many of its borrowing member countries.
"Poverty," said President Bourne, "remains a very challenging problem in our region".
He estimates that poverty levels vary from some 15 to 48 per cent in some countries with an average of 25 per cent across the region. It requires a concentrated effort to reduce the tremendous social burden being experienced by far too many of the region's peoples.
Whatever the precise major agenda issues for the coming annual CDB meeting, the fact is that the challenges for orderly social and economic advancement in the Caribbean have become more acute with the expanding emphases being placed by the powerful and wealthy nations on national/international security and the war against terrorism with the implications they have for new and costly demands on the very limited resources of already seriously disadvantaged regional economies.
Prior to that now international reference point of `9/11’ - the terrorists' strikes against the USA in September 2001 - the economic performances for most of the CARICOM countries over the past decade did not make for encouraging reading.
Decelerated economic growth rates have, generally, been the pattern. As the CD B's Bourne tells it: "Moreover, year-to-year performance in the region has exhibited the volatility which has generally characterised economic performance, reflecting both domestic and external economic shocks and natural disasters..."
Bourne's analysis has led him to suggest that a "substantial part of the reason for the decline in economic growth performance over the past 10 years in the region is to be found both in the lack of diversification of product-types and export markets, and in the low levels of competitiveness and production flexibility in our output generation systems".
The reality is that this remains a serious challenge to be addressed, and not only by the regional financial institutions but the political directorates and private sector decision-makers across the region.
For the CDB's President, it is clear that if the general regional objective of a sustained increase in living standards for the people is to be realised, then there will need to be a shift in reliance away from traditional commodities to those goods and services which are amendable to continuous re-formulation, re-packaging and re-presentation to achieve continuing growth..."
The tendency by private sector leaders to shift blame to public sector bureaucracy, or high tax rates, labour market rigidities and high borrowing costs as obstacles to their own ability to expand economic growth, has become a norm that requires critical re-assessment rather than ready acceptance, according to the CDB's President.
At this present time, when there are increasing concerns in both the public and private sectors over the region's "readiness" for the Caribbean Single Market and Economy (CSME), the challenge is to avoid being overtaken by the major initiatives of the Free Trade Area of the Americas and the World Trade Organisation, according to the CDB's President.
The FTAA and WTO initiatives are certainly among major agenda issues for meetings of CARICOM heads, ministers and technocrats. We await to learn what our Community leaders have to tell the region's peoples after their just-concluded Inter-Sessional Meeting in St. Kitts and well ahead of their forthcoming 25th annual summit in Grenada in July.