Economic Undertakings

From vulnerability to resilience in the Caribbean Community


(MENAFN- Caribbean News Global) The following is an article written by Secretary General Luis Almagro, originally published in the Uruguayan newspaper Cronicas on October 29, 2021.

“The article is consistent – and reflects – the commitments Secretary-General Almagro has made to us in our several meetings, which many of us have attended, including our recent lunch meeting with him,” said Sir Ronald. Sanders, Ambassador of Antigua and Barbuda. .

By Luis Almagro

The COVID-19 pandemic has made the multidimensional nature of the development challenges facing countries in the region a reality and exposed structural problems and vulnerabilities. In this column, I want to refer in particular to those of 14 members of the Organization of American States (OAS). These states form the Caribbean Community Group (CARICOM), most of which are among the smallest and most vulnerable countries in the hemisphere.

These island and coastal states present well-known inherent structural and systemic vulnerabilities due to their remoteness, small size, open economies, and technical and financial constraints. In addition, they are very sensitive to climate change and its adverse effects, including sea level rise, the rise and rise of intense hurricanes, droughts and floods; economic and fiscal crises in the economies of its main trading partners; and the associated humanitarian problems that arise from the impact of all these external events.

The pandemic has exacerbated many of these challenges and highlighted the existential threats posed by these exogenous factors. Economic security, health and human security, food security and environmental security are all closely linked and at stake very strongly.

The impact of the pandemic was transmitted to the Caribbean through five channels: a collapse of the tourism industry; worsening financial conditions with insufficient response from international financial institutions; a reduction in remittances from developed countries where migrant workers are predominantly among those who have lost their jobs; a fall in commodity prices due to a global rise in unemployment and the consequent drop in demand for commodities; and a sharp reduction in foreign investment.

If covid-19 is brought under control, it will be at least two years before the tourism industry returns to normal. Many CARICOM economies will contract significantly by then, show negative growth, and have serious difficulties providing the fiscal stimulus necessary for recovery.

Some CARICOM countries, many of which are vulnerable to hurricanes, no longer have access to favorable financing conditions. Therefore, based on the existing criteria, based primarily on per capita income, these countries will not be eligible for the considerations that the World Bank (WB) and the International Monetary Fund (IMF) grant to middle-income countries, including financing needs and debt relief. or access to the Fund’s rapid credit facility.

As economies continue to weaken, with an insufficient response from the international community for debt rescheduling and access to concessional finance, unemployment and poverty are increasing. In addition to the economic impact of the pandemic, there will surely be social upheavals and increased crime levels. All of this could lead to a vicious cycle of increasing debt and underdevelopment, which in turn could lead to an erosion of governance conditions. Democratic stability is a hallmark of most CARICOM countries.

There is a need to come up with a new framework for partnership, within which the international community, especially the richest and most developed nations and international financial institutions, can support CARICOM’s efforts to reduce vulnerability and build resilience. , on the basis of quantifiable measures, so that these countries can ensure their long-term viability and further develop their capacities to fully integrate into the global economy.

Energy insecurity persists even in CARICOM member states that have been wrongly classified as high income countries. Without a more inclusive approach to the cooperation of extra-regional partners, international financial institutions (IFIs) and multilateral development banks (MDBs), to ensure energy security, CARICOM countries will not acquire the infrastructure and institutional capacities. required. With the exception of the three oil and gas producing countries – Guyana, Suriname, and Trinidad and Tobago – they will continue to suffer from energy insecurity by paying high prices for energy, which in turn will , will increase the production costs of their agricultural, manufacturing and tourism industries. .

However, these circumstances provide an opportunity for profitable foreign investment and the IFIs are supporting the development of renewable energy sources to which CARICOM governments are fully open as public-private partnerships or as buying companies, d ‘operation and transfer.

Food security is an important issue for most of the CARICOM countries. Climate change has already negatively affected food production and is expected to have a worse effect. Extreme heat, droughts, floods, encroachment of salt water from rising sea levels and storms have affected agricultural productivity and led to increased food prices and losses of income. Persistent hurricanes wiped out crops, pushing farmers into bankruptcy and forcing them to shut down the business, in many cases permanently. According to the Food and Agriculture Organization of the United Nations (FAO), it is possible that by 2050, crop yields will decline by 10 to 25 percent due to climate change.

The Caribbean and Central America are the first frontier against climate change, they are the most affected countries in the world. Regarding the hurricanes which year after year destroy one or more CARICOM countries, keeping them in a high debt cycle, it is proposed that the IFIs and donor governments, especially the G20 countries, establish a “Caribbean Stimulus Fund” that would be a rapid response facility that addresses the urgent need to rebuild resiliently after hurricanes, but also to build before hurricanes to minimize damage if they do occur.

The IMF, WB, IDB and G20 countries should consider special arrangements for CARICOM countries, including (a) suspension of per capita income as a criterion for concessional financing; (b) debt relief, including suspension of debt payments, cancellations of aging debt, including by the Paris Club; (c) budget support through a combination of grants and low cost country-by-country loans.

G20 countries should increase PAHO’s resources, as well as direct programs through the Caribbean Development Bank to help CARICOM countries cope with the extraordinary public health expenses that have suddenly arisen in this country. following the effects of covid-19.

In tourism, G20 authorities should consider formulating a cooperative relationship with CARICOM countries establishing travel protocols between their countries, by air and sea, with the creation of safe travel procedures and mechanisms to restore tourist flows.

The pandemic has underscored the need for continental and international communities to support the ongoing efforts of CARICOM countries to reduce their vulnerability and improve their resilience to exogenous shocks that are not of their own initiative. The imperative now is to establish effective and meaningful collaborative mechanisms to mitigate global risks and threats, increase levels of preparedness and promote consistency of response.

As CARICOM governments design and implement strategies to emerge from the crises generated by the COVID-19 pandemic, the imperative to build more resilient economic, social and environmental systems has never been more urgent. In this regard, there is a need to forge a new consensus, in which regional governments and their international partners seize the opportunity presented by the pandemic to build capacity, in the pursuit of a more sustainable and equitable future.

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