– At Annual Meeting in Cancun, Mexico
THE Caribbean has called on the Inter-American Development Bank (IDB) for continued development support to ensure a transformation of its economies to reduce fragility and vulnerability, promote sustained growth and prosperity and improve the lives of all of its people.This sentiment was expressed by Minister of Finance Dr. Ashni Singh during his address at the Inter-American Development Bank (IDB) 2010 Annual Meeting of the Board of Governors in Cancun, Mexico yesterday.
The Minister, who serves as Alternate Governor for Guyana, made his presentation on behalf of The Bahamas, Barbados, Guyana, Jamaica and Trinidad and Tobago.
Noting that the Region is inordinately susceptible to climate change and thereby exposed to the vagaries of external economic conditions, the Minister pointed out that the situation is made all the more difficult by the various dimensions of acute vulnerability, including the limitations of economic size, which reduce the menu of policy responses and options at their disposal.
“For this reason, the small middle income developing economies of the Caribbean require policies formulated specifically in response to their unique structural and institutional characteristics and economic circumstances. If this is to be achieved, it is important to look beyond the illusion of our per capita income, which masks both the extent of our macroeconomic fragility and the existence of persistent pockets of poverty in our countries.”
Minister Singh pointed out that the Caribbean seeks a lasting transformation in its economies, one that reduces fragility and vulnerability, promotes sustained growth and prosperity, and improves the lives of all of its people.
He pointed out that the IDB has a vital role to play in helping to achieve this Caribbean transformation.
“One example of how the Bank can support this transformation is through the work of the Inter-American Investment Corporation (IIC). We have long called for increased activity by the IIC in the Caribbean, and we are pleased to see recent favourable responses to this call. We wish to commend the IIC for its positive outreach to the region, and we note that there were two operations approved in support of the private sector last year. We urge continued efforts by the IIC to increase its operations in the Caribbean. We also welcome the clear focus of the Multilateral Investment Fund and we see the new Access Approach Framework as a positive step to overcome challenges to productive economic activity,” Minister Singh said.
He pointed out that as part of efforts to promote the development of a competitive and responsive private sector, the Caribbean will be hosting for the first time the Eight Annual Inter-American Conference on Corporate Social Responsibility in Port of Spain, Trinidad, in November this year.
Recalling the recent catastrophes that devastated partner CARICOM country Haiti, Minister Singh extended condolences to the Government and people of that country, and Chile, and commended the IDB on its response to the countries in their time of greatest need.
“For us in the Caribbean, these disastrous events are a stark reminder of our own susceptibility and vulnerability to natural disasters, a circumstance that has affected in very significant measure the pace and quality of development in our region over the years,” Minister Singh said.
The Minister pointed out that the arrangements which the Bank is making to scale up and frontload the immediate delivery of development support to Haiti and to sustain that support over the medium and long-term is welcomed. He reiterated that all member states of CARICOM will remain actively engaged in Haiti’s reconstruction efforts, and that future interventions will involve collaboration with the Bank and other international organizations.
Referring to the recent global financial crisis, the Minister stated that this continues to be a stern test to the resilience of economies of the Caribbean, straining social safety nets, and threatening to erode the gains that have been made in poverty reduction.
“The impact of the global crisis has highlighted the acute vulnerability of our small developing economies to the external economic environment.  The combination of declining export demand, tourism receipts, remittances and foreign investment flows has severely affected economic growth. This crisis has cost some of our economies as much as eight percentage points of real growth and a return to better days in the near term is not likely for many of our countries,” Minister Singh said.
He stated that the dilemma confronting the Caribbean is how to promote economic recovery in a context where government revenue is constrained by contraction in the real sector, opportunities for creating fiscal space are few, and access to financing is limited and costly. In such a fiscally constrained domestic environment, economic stimulus requires external funding on terms and conditions provided by Multilateral Development Banks.
“It is circumstances such as these that demonstrate beyond question the importance of the decision we have made for the region and the Bank, enshrined in the Declaration of Cancun. The increase in the Bank’s resources will have far reaching implications for its ability to help its borrowing member countries continue the fight against poverty and inequality, support the competitiveness and expansion of the private sector, adapt to and mitigate the impact of climate change, and implement measures to ensure sustainable growth,” Minister Singh said.
The Minister stated that over the years, the Bank has supported efforts to address social development challenges; strengthen the institutions for growth and social welfare; improve infrastructure; and strengthen the public-private dialogue to facilitate market driven private sector-led growth.
He pointed out that the Region looks forward to the Bank’s continued support as the Region charts a path in the turbulent global economy.
“In 2008 and again in 2009, the Bank approved and disbursed record amounts to this Constituency. We are confident that the new institutional strategy combined with the increase in resources will reinforce this trend,” Minister Singh said.
The Finance Minister also noted the commitment that the Bank will continue its work in partnership with the Caribbean Development Bank (CDB), and in particular to ensure that the IDA-eligible non-IDB member countries of the Organization of Eastern Caribbean States (OECS) retain their access to FSO resources. As is implicit in its Charter, the Bank should continue to treat the CDB as a sovereign borrower, Minister Singh opined.
In the area of climate change, Minister Singh stated that in going forward, the region will rely on the Bank’s unique strengths as it confronts the important development challenges.
“Foremost amongst these is the reality of climate change. Our countries are characterized by a high concentration of human settlements, economic activity, and infrastructure on narrow low-lying coastal zones that are at risk from rising sea level. In addition, our productive base continues to be dominated by sectors such as tourism and agriculture which are severely affected by erratic, unpredictable and extreme weather events. In recent times we in the Caribbean have been experiencing hurricanes and alternating floods and droughts with greater frequency and severity than ever before,” Minister Singh said.
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nister Singh stated that governments of the Caribbean countries are implementing comprehensive measures to preserve their pristine forests, unique biodiversity, and coastal fisheries, to convert their energy supply to more renewable sources, and to accelerate sustainable development.
“Against this background, we support the Bank’s efforts to become a greener institution, not only with respect to its own carbon footprint, but also with respect to its portfolio of projects and technical assistance in all of its borrowing member countries. We look forward to the Bank’s continued support as we confront climate change, adapt to its effects, mitigate its impact, and contribute to the global effort to slow its advance,” Minister Singh said.