AN OBJECTIVE assessment by governments of the Caribbean Community would be quite appropriate for the independent overview of the global crisis and regional economic challenges as offered last week by president of the Caribbean Development Bank (CDB), Dr Warren Smith.
This would be of particular relevance for those of the CDB borrowing countries that have been showing modest growth – such as Barbados – and, worse, contractions in various members of the Organization of Eastern Caribbean States (OECS).
According to Dr Smith, the “fledgling global recovery” that started in late 2009 is now likely to move at an even more “subdued pace” by risk factors such as a slip back into recession by economies in the European Union, the so-called “Eurozone”.
While national Central Banks continue to monitor and provide helpful guidelines for economies of the CDB family, the assessments from the Barbados-based premier financial institution for regional economic development deserve to be carefully considered by its borrowing members that regularly benefit from significant concessional loans and grants in various sectors in addition to technical assistance.
With BMCs (borrowing member countries), plagued by lingering high debt ratios, expanding unemployment and weak indicators of financial sector activity and stability, the CDB’s president sounded a timely warning that the “threat of credit downgrades facing some BMCs should infuse them with the discipline to stay the course of reforms . . .”.
The CDB has often pointed to the need for more vigorous involvement of the private sector in national/regional development.
But speaking last week at his first full media briefing at the bank’s headquarters, Dr Smith referred to prevailing underdiversified economic structures, under-developed infrastructure and a lack of “private sector competitiveness, as well as weaknesses in the area of regulation and supervision”.
A question often raised is the extent to which governments of the BMCs seek to take advantage of the independent intellectual resources located at the CDB, and outside of negotiations for loans and/or grants, when coming to grips with fiscal and economic challenges they often confront as a consequence of domestic and external factors.
Given current fiscal constraints, the bank’s president has made clear his view that regional policymakers must pursue with haste reforms to economic management, including public financial management and the development of statistical capacity, in order to ensure efficient, evidence-based allocation and use of resources.
