Caribbean leaders call for more concessional financing

Feb 11, 2023 News

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…say it should be based on countries vulnerability not per capita basis

By Renay Sambach

Kaieteur News – Caribbean leaders on Friday called for more concessional financing, highlighting that it should be based on the countries vulnerability instead of per capita basis at a high-level conference hosted by the World Bank and the Eastern Caribbean Central Bank (ECCB) in St. Kitts and Nevis.

Guyana’s Minister of Finance Dr Ashni Singh was among the regional leaders who made an appeal to international financial institutions during the conference themed “Building Resilience through Sustainable Development Financing in the Caribbean”.

Their calls come on the heels of the current debt level in the Latin America and Caribbean standing at a whopping US$5.8 trillion.

The hybrid event convened key government officials, creditors, and partners to collaborate and coordinate on facilitating debt sustainability in the Caribbean—with a focus on the Commonwealth of Dominica; Grenada; Guyana; Haiti; Saint Vincent and the Grenadines and others.

The conversation brought together key players to discuss proactive measures to ensure sustainable financing, and to reflect on lessons learnt from past crises in the Region. Against this backdrop, a discussion was focused on the World Bank’s Sustainable Development Finance Policy, which enhances incentives for countries to move toward more transparent and sustainable financing practices.

During his virtual address Dr Ashni Singh stated, “It is well known in the Region that we have a serious problem with indebtedness and we are not being treated with the seriousness the matters deserves, because we have what I call the middle income-illusion.”

The Guyanese minister explained that the ‘middle-income illusion’ has resulted in Caribbean countries not qualifying for the typical treatments low-income countries would get, both in terms of consideration for debt relief and consideration for concessional development financing.

“When we speak of sustainable development financing in the Caribbean we have to put this question of debt sustainability squarely on the front of the table, we have to accept and confront the reality that the Caribbean faces this peculiar vulnerability that has to be taken into account for the purposes of mobilizing financing, both through new resources and also debt relief and the World Bank is uniquely placed and uniquely endowed with the intellectual assets to articulate this case in a rigorous way,” Dr. Singh emphasized.

The minister believes that a lasting solution to the fiscal challenges faced in the Region will not be achieved until the Region is able to achieve productive diversification.

“So there also has to be a conversation with the World Bank and with our other development partners on how we find a lasting solution to the challenges of limited opportunities for productive diversification…” he added.

Other speakers including Dr. Irving McIntyre, the Commonwealth of Dominica’s Minister for Finance, Economic Development, Climate Resilience and Social Security;Dickon Mitchell, Prime Minister and Minister of Finance, Grenada; Michel Patrick Boisvert, Minister of Economy and Finance, Haiti and Camillo Gonsalves, Minister of Finance, Saint Vincent and the Grenadines; all called for more access to concessional financing for the Region.

Similarly, Timothy Antoine, Governor of ECCB called for more concessional resources to be made available to the Region and explained too that it should be on the basis of vulnerability and not on a per capita basis. Antoine also appealed for disaster clauses to be embedded in all Caribbean countries’ debt contracts.

The Governor noted that amid Caribbean countries having to deal with the long-lasting effects of the COVID-19 pandemic, a cost of living crisis, energy crisis, food insecurity, and the existential threat of a climate crisis – they are also grappling with high debt levels on one hand and the need for sustainable financing on the other hand.

“During the pandemic we (Caribbean countries) had to accumulate additional debt to cushion the effects on our population…,” the Governor said adding, “Here is the thing we as a region have to deal with the fact that even as we confront the need to build resilience which is the case of sustainable finance, we are dealing with high debt levels.”

“Have annual reporting on climate finance flows to this region. Why am I saying this? Because we are getting very little,” he stated.

The Governor explained that in 2022 there was US$653 billion in the climate finance flows, but only little came to the Caribbean.

Antoine highlighted, “We (Caribbean countries) are among the lowest emitters and the hardest hit and by the way the IMF study has found that we are seven times prone to a natural disaster than any other Region in the world and when we get hit the losses from those disasters are 6 and a half times higher than the global average. Making the case clearly for more resources for the Region.”

Moreover, for her part, Lilia Burunciuc, Country Director, Caribbean, World Bank stated, “We have done enough but there is still more that needs to be done.”

Burunciuc highlighted that in the Region debt servicing is constraining fiscal space for targeted social support, for growth enhancing investments and for building more resilience.

“In recognition of the vulnerability of small states, the World Bank has delivered strong support to the Caribbean crisis response effort. Financing for small states has increased six times since 2015, for the small economies and budget support programs,” the World Bank representative said.

Burunciuc disclosed that building on the successes of Jamaica’s catastrophic bond, which is the first in the Caribbean, she said that the World Bank is working now to implement a Regional catastrophic bond which will provide additional insurance for vulnerable Caribbean countries against natural disasters.

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• Commonwealth, concessional, Eastern Caribbean Central Bank (ECCB), financing, World Bank

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