ECLAC: Borrowing not an option
SANTIAGO – The Executive Secretary of the United Nations’ Economic Commission for Latin America and the Caribbean, Alicia Bárcena, says borrowing is not an option for Caribbean countries, stating that access to concessional funding and debt relief is needed to face the novel coronavirus (COVID-19) pandemic.
ECLAC said Caribbean heads of state and finance ministers met virtually with Bárcena on Wednesday to analyse debt relief proposals and other measures to fight the effects of the pandemic.
Bárcena said Caribbean countries must increase their fiscal space and that they need more favourable financing conditions, “notwithstanding their income per capita income levels, in order to face the pandemic’s effects”.
“Considered as middle-or high-income countries, Caribbean countries face a lack of access to liquidity on concessional terms. This is why policy proposals to support economic recovery with a people-centred approach are urgently needed.”
Several regional leaders participated, including Gaston Browne of Antigua and Barbuda, Dominica’s Prime Minister Roosevelt Skerrit, Bahamas Deputy Prime Minister Peter Turnquest, St Vincent and the Grenadines Finance Minister Camillo Gonsalves, as well as Andrew A. Fahie, Premier and Minister of Finance of the British Virgin Islands; and Montserrat’s Premier Easton Taylor Farrell.
ECLAC said all of them expressed concern at the highly vulnerable economic situation they were currently facing.
They also urged ECLAC’s support of their advocacy in engagement with the international community for better access to grants and concessional financing.
“The economic burden for our countries has been unsustainable because of the high levels of debt,” Browne said, noting “we don’t have the capacity for printing money and our policy instruments are very limited.”
“What is required at this point is some level of support from international financial institutions, such as the International Monetary Fund (IMF) and the World Bank. ECLAC can help us advocate and raise its voice for us.”
Describing innovative ways by which concessional financial assistance might be extended to Caribbean economies, Browne proposed that consideration be given to having credit extended to countries which have already invested in green technology.
This, he suggested, could be applied through debt relief, informing the meeting that Antigua and Barbuda was already exploring this option.
For his part, Gonsalves identified the IMF Rapid Credit Facility (RCF) as an important mechanism, “which typically offered timely liquidity support free of conditionalities”.
He urged ECLAC support in promoting new financing instruments for the Small Vulnerable Economies of the Caribbean, and in advocating that valuable financial instruments such as the RCF remain available and unchanged during these challenging times.
He also suggested that other innovative instruments such as that offering debt forgiveness to countries affected by the Ebola epidemic in Africa be considered in these similar circumstances created by COVID-19.
A strategic plan of support for the countries of the Caribbean in the short-term is, therefore, urgently needed, Gonsalves said.
Bárcena reassured the subregion that this dialogue’s results and key messages would be delivered to the United Nations Secretary-General António Guterres,
“We find ourselves in very challenging times. There can be no doubt that COVID-19 will have a profound and lasting impact on the welfare of our countries and our region for the next several months. We are putting the Caribbean first in everything we do.
“It is commendable that every government has been putting the health and wellbeing of their populations first; and so, I am happy to see the progress that has been made in controlling the spread of infection across the Caribbean,” she added.
“However, this effort has come at a very high cost, particularly in your subregion, which already suffers a high level of vulnerability to both climatic and economic shocks, and with many of your economies already shouldering debt that is still very heavy, even with progress made to reduce external debt levels in recent years,” Bárcena said.
“The ECLAC’s resilience fund proposal has the potential to offer much needed long-term relief particularly to middle income countries. Acceleration of the debt swap initiative and establishment of the ECLAC Climate Resilience Fund is needed, given the impact of the pandemic and the potential for an active hurricane season in 2020,” she said.
“We have heard from all of you that you need immediate action. Borrowing is not the answer to confront this crisis. Caribbean countries need grant support fast. There is need for urgent intervention to ensure liquidity.
“Let me say that we are very much on board. We are part of this. A game plan for the short term is needed and we have to work on this, together with CARICOM, ACS and OECS,” Bárcena said, adding “we will continue to advocate for this debt relief, for grants, for concessional funding for the Caribbean countries.” (CMC)