– CARICOM Chair says Region’s survival depends on fair treatment
– slams outdated vulnerability index, market exclusion

By Lisa Hamilton

THE effects of COVID-19 is “disproportionately deeper” for many Caribbean countries which continue to be wrongfully classified in their debt obligations and are shut out from categories of financial assistance due to an outdated vulnerability index.

CARICOM Chair and Prime Minister of Barbados, Mia Mottley, made it clear on Wednesday that the Region is tired of sounding like a “stuck record” on the matter and wants its voice and experiences to be heard before these concerns morph into a greater crisis.

She delivered these sentiments on behalf of the region during an Extra-Ordinary Meeting of the Organization of African, Caribbean and Pacific States (OACPS) via video conference.

Mottley said that the majority of countries in the region are being excluded for being categorised as “middle-income countries” but yet are too small to command access in the market even when there is evidence of market failure.

She explained that the profile of many Caribbean countries have too high a debt-to-GDP ratio and little room to manoeuvre which has left the Region exposed during times of crises and even more so during the COVID-19 pandemic.

The debt-to-GDP ratio is the metric comparing a country’s public debt to its Gross Domestic Product (GDP). By comparing what a country owes with what it produces, the debt-to-GDP ratio indicates that particular country’s ability to pay back its debts.

A STRONG ECONOMIC RESPONSE

As is currently the case, Mottley said that the impact of the pandemic on CARICOM Member States should not be viewed based on the number of cases and deaths — which are few in comparison to other regions — but based on the economic impact they have been dealt as the world’s most trade and travel dependent region.

Tourism represents almost over 50 per cent of the region’s GDP and employment. Even so, Mottley highlighted that the Region remains committed to suffering this economic blow in the interest of protecting the health of its citizens as human lives cannot be replaced.

However, she stated: “At the same time, an equally strong economic response is needed. We find it almost impossible, however, to do both with respect to the protection of lives and livelihoods in the circumstances in which we find ourselves globally. We simply do not have the fiscal space to marshal an economic stimulus the size and scope that our developed partners can secure or that we need.”

The Caribbean Development Bank (CDB) has forecast a collapse in some Caribbean tourism-dependent countries with declines as low as 11 per cent and as high as 30 per cent. The CARICOM Chair said that these figures mirror that of the economic decline of many European countries during World War II, which led to a marshal plan being settled to ensure that they did not become failed States.

“We ask our brothers and sisters to take note of this fact and to recognize that this can no longer be the subject of politely-listened-to speeches and repetitive pleas to a world that is not yet hearing or not yet seeing us. Our small States have been suffering from high debt and low growth for decades and we believe that they should be mature and relevant conversations for middle-income Small Island Developing States across the globe as it relates to our debt obligations in the midst of this pandemic,” Mottley said, adding:

“Emergency fiscal measures, including debt relief, are needed to relieve the pressure on the highly indebted states of the Caribbean and avert another crisis of deep and long-term impoverishment of our people.”

She said that there will either be an orderly restructuring of debt; at the very least a debt moratorium that provides certainty for both borrower and lender or an unraveling that will create a crisis within the Region and the financial markets.

UNSOUND, DESTRUCTIVE

At such a critical time of crisis and survival, she said that CARICOM notes and rejects the decision of European Union (EU) to place regional members on a “shame list” of high-risk third-States deemed to have strategic deficiencies in Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) regimes that will pose “significant threats” to the financial system of the EU.

She said that not only does CARICOM reject this but points to the fact that the regional countries on the “shame list” have already committed to working with the Caribbean Financial Action Task Force (CFATF) which are regulatory and, in some cases, depend on money supply and technical issues.

“It is our view that the list was not established by a transparent process with clear and concrete benchmarks. No one spoke to us, we read it in the international media; no one sent a diplomatic démarche to us nor did it respect our right to be heard or allowed to prioritise ongoing reforms that we’re doing to avoid being listed by anybody,” she said.

“Left unchecked, the action taken by the EU would further decimate our economies since our financial and international business sectors are key engines of growth for us in the Caribbean and, I must confess to you, was the only sector left untouched by COVID until this unfortunate action was taken with the publication of this shame list.”

A REVAMPED INDEX NEEDED

In her remarks, the CARICOM Chair also iterated the Caribbean’s call for a revision of the vulnerability index which presents a flawed GDP-per-capita system which uses much too old information to determine current vulnerability.

Mottely stated: “Even when our circumstances deteriorate like now, there is no review or assessment mechanism that takes into account our inherent vulnerabilities. And, despite these acute vulnerabilities, the region is being denied access to the support being given to those as vulnerable or even less so because of an outdated and ill-suited definition of vulnerability, namely: historic-GDP-per-capita.”

She said that this was pointed out almost 30 years ago but yet there have been limited to no action taken to address it. Like citizens around the world expressing their plight in the #blacklivesmatter movement who feel as if for too long they have not been heard, Mottely said that so does the Caribbean region.

She stated plainly: “We Small Island States know the feeling only too well for we feel that we sound like a stuck record and we recognized that no system that is ignored forever can flourish and hence we find sympathy for the actions taken by those in the United States of America who are simply asking, in the words of Peter Tosh, for justice. It is clear, my brothers and sisters, that we need additional criteria to determine equitable access and fair allocation that truly measures our vulnerability in the middle of a pandemic and at the start of a hurricane season.”