GEORGETOWN: Guyana President Donald Ramotar has called on the Barbados-based Caribbean Development Bank (CDB) to help the region identify new areas of growth at a time when the Caribbean continues to experience weak growth, elevated fiscal imbalances and heightened risks within the financial market.
Addressing the 44th Annual Meeting of the CDB Board of Governors last week, Ramotar said the region’s premier development financial institution must help in developing the human resource capital in the Caribbean.
“This role is vital for the development of our region,” he said.
Ramotar told delegates that most of the challenges facing regional countries were not of their own doing and as an example, the global economic and financial crisis from 2007 “had impacted heavily on many of the countries of the region”.
He said that in addition to the crisis, many Caribbean countries are now unable to secure loans at concessionary rates as in the past due to their “graduation” by the developed countries.
“This is a major problem and threatens the social and economic gains of the past,” said Ramotar. “We cannot afford a reversal.”
Ramotar criticized the decision to graduate regional countries to middle-income states as “short-sighted because the region needs to build on its gains”.
He said the region needs to look at new areas of economic growth and identify new mechanisms to achieve this goal.
“In the future, I think the bank should help us to identify new sources of growth,” said Ramotar, adding that the region should be involved in the information, communication and technology sector. “We have to use it to help us develop and strengthen our base.”
He said there was need for greater investment in agriculture and applying more science and technology in developing the sector; and there was a role for the CDB in helping the region deal with its high debt.
During the meeting, Montserrat Premier Reuben Meade said there are many policy challenges facing the region and in particular, small open and vulnerable economies.
“While we have had some economic success in the past, the protracted global economic and financial morass and the ensuing international regulatory regime have exposed and aggravated the vulnerabilities that exist,” he said. “Consequently our region continues to experience weak growth, elevated fiscal imbalances and heightened risks within the financial market. These factors affect the quality of life of our residents and citizens.”
Meade said an appropriate solution to the challenges the region faces would be extremely difficult without the help of development partners to include the international financial institution community.
“This is principally due to our limited resource base, available financial policy instruments, productive capacity constraints and general inefficiencies related to economies of scale,” he said. “These will continue to create barriers to growth with consequential impacts on budgets and the private sector that we depend on to fuel growth.”
Meade said while the regional countries were appreciative of the support of the CDB in making funding available through loans at concessional rates and grants, several others were “unable to benefit from grants because of their perceived wealth as indicated by their per capita GDP.
“Nevertheless, the introduction of policy-based lending has helped to target resources to areas of priority,” he said.
Meade said that the banking system remains under considerable stress in most of the regional countries and that the non-performing loan portfolio in some jurisdictions, poor management and cost of operations along with a reduction in investment opportunities, have significantly reduced the viability of some indigenous banks.
“This can be seen from forced interventions in a few banks and significant losses in others,” he said. “Whether a resolution strategy is implemented now or later, the issue will need to be comprehensively addressed.”