GEORGETOWN, Guyana: President Bharrat Jagdeo says Caribbean Community (CARICOM) nations will go bankrupt if the debt situation across the region isn’t brought under control.
He said, however, that he believes debt reform can pull them back from the edge.
“Many of the countries simply cannot pay their way. They can’t meet recurring cost and pay their debts and unless there is radical restructuring or increased sources of revenue, the situation will get worse. Many of these countries will not have a good future unless you can tackle the debt,” Jagdeo said last weekend.
Jagdeo said poor productivity and heavy debt were the main factors contributing to the financial crisis in the region. He added that the global financial crisis and the drop in tourist arrivals, exports and remittances have exacerbated the situation.
He said he wants to see international financial institutions (IFIs) helping out.
At present there is no multilateral initiative for debt relief or debt restructuring to middle income countries. Jagdeo says the region requires a special provision in the international IFIs’ structure for debt relief to small vulnerable middle-income countries.
“The general lobby has to be one for debt relief for middle income countries that have peculiar vulnerabilities, that are different than the large middle income countries so that there is no moral hazard,” said Jagdeo.
At the 21st CARICOM Inter-Sessional Meeting held in Dominica earlier this month, World Bank President Robert Zoellick said the financial institution is currently studying the debt profiles of the region’s countries in order to construct appropriate plans to ease the load.
He said the Bank was willing to send teams to the various CARICOM member countries to see whether a strategy could be developed that focuses on growth as well as good fiscal management and effective use of debt.