I too would like to add my word of welcome to all of you in attendance today and to the IMF for hosting the third Caribbean High Level Forum in Jamaica.
Several studies have shown that the main constraints to growth are primarily on the supply side. These include: (1) a high debt burden with the associated impact on the cost of capital and on governments’ ability to undertake its core functions and provide essential services; (2) a burdensome and inequitable taxation system and (3) high energy costs, to name a few. These supply side constraints can, when combined, create an environment that frustrates dynamic and robust entrepreneurship and limits business modernization that could lead to broad-based and sustained economic growth.
The impact of the 2008 financial crisis on Caribbean countries has been particularly severe and the effects most prolonged. In fact, they still continue. When coupled with the high debt that many of these countries are experiencing, the impact manifests itself in low or no economic growth. Some of our countries have either entered programmes with the IMF, or are working with the Fund and multi-laterals, to lessen the impact, and we appreciate the assistance provided thus far. However, it is important for me to reiterate, and for you to appreciate the challenging conditions that Caribbean nations, in particular, encounter.
Fiscal consolidation is a major plank of all the programmes. But fiscal consolidation limits the ability of any Government to support growth. We are therefore delighted that this Forum is being held in Jamaica and especially pleased about the theme – Unlocking Economic Growth….we here in Jamaica, having come this far, have been looking for the key to unlocking even more growth than we have experienced in the last four quarters.
With the limitations all regional governments face, it is important that we continue to encourage the private sector to look at the opportunities that exist, and to invest in the region’s future. It will require, in some cases, a new way of doing things; it will require being innovative; exploring new markets, focussing on products that are higher up the value chain and products that are particularly for export.
That said, the international community appears, seemingly, oblivious to the fact that sustainable growth and development will not be possible without a coordinated global effort to assist the Caribbean region. There have been some signs of support, particularly as it relates to climate change and gender affairs, but far more is needed. For example, a regional strategy for energy must be placed on the table.
It is also time that we in the Caribbean revisit the foundations of regional endeavours and arrangements. It is time that we look at the current CARICOM taxation treaties and discuss the Common External Tariff. Regionalism needs to not only induce growth but must be equitable.
The support of the multi-lateral community is also critical to our success. There have been public announcements on increased support for middle income countries, a moniker which inadequately describes the realities we in the Caribbean face. While Caribbean nations unequivocally qualify as small island states, the support provided up to now, relative to similar regions, has been largely in rhetoric than performance. It is time we move to the operational phase of the agenda for the Caribbean region. At the recent IMF/ World Bank Annual Meeting, this point was reinforced and the President of the World Bank has agreed to meet with Caribbean Ministers of Finance in the new year. We must be very clear at that meeting on what is required, not only on a regional basis, but also for each of our unique sovereign situations.
It is also important that the dialogue continues with the international community on refining the support necessary to ensure that the Caribbean region escapes the trap of low growth and under-performance.