Strategies for Increasing Economic Resilience in the Caribbean
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STRATEGIES FOR INCREASING ECONOMIC RESILIENCE IN THE CARIBBEAN ISSUE 3 / JULY - SEPTEMBER 2019 ABOUT ECLAC/CDCC The Economic Commission for Latin America and the Caribbean (ECLAC) is one of five regional commissions of the United Nations Economic and Director’s Desk: Social Council (ECOSOC). It was established in 1948 to support Latin Strategies for increasing economic resilience in 3 American governments in the economic and social development of that region. Subsequently, in 1966, the Commission (ECLA, at that time) the Caribbean established the subregional headquarters for the Caribbean in Port of Spain to serve all countries of the insular Caribbean, as well as Belize, Strategies to avoid debt traps among developing 4 Guyana and Suriname, making it the largest United Nations body in the countries as they pursue the SDGs subregion. Promoting a competitive tourism industry in the 6 At its sixteenth session in 1975, the Commission agreed to create the Caribbean through upgrading and diversification Caribbean Development and Cooperation Committee (CDCC) as a permanent subsidiary body, which would function within the ECLA Financing Agro-processing in the Caribbean 8 structure to promote development cooperation among Caribbean countries. Secretariat services to the CDCC would be provided by the subregional headquarters for the Caribbean. Nine years later, the Building a Case for Trade Driven Economic 10 Commission’s widened role was officially acknowledged when the Economic Commission for Latin America (ECLA) modified its title to the Restructuring in the Caribbean: An Examination Economic Commission for Latin America and the Caribbean (ECLAC). of the Trinidad and Tobago Trade Policy CONTENTS Key Areas of Activity The ECLAC subregional headquarters for the Caribbean (ECLAC/CDCC Regular Features secretariat) functions as a subregional think-tank and facilitates increased contact and cooperation among its membership. Complementing the Recent and upcoming meetings 15 ECLAC/CDCC work programme framework, are the broader directives issued by the United Nations General Assembly when in session, which List of Recent ECLAC Documents and 15 constitute the Organisation’s mandate. At present, the overarching Publications articulation of this mandate is the Millenium Declaration, which outlines the Millenium Development Goals. Towards meeting these objectives, the Secretariat conducts research; provides technical advice to governments, upon request; organizes intergovernmental and expert group meetings; helps to formulate and articulate a regional perspective within global forums; and introduces global concerns at the regional and subregional levels. Areas of specialization include trade, statistics, social development, science and technology, and sustainable development, while actual operational activities extend to economic and development planning, demography, economic surveys, assessment of the socio-economic impacts of natural disasters, climate change, data collection and analysis, training, and FOCUS: ECLAC in the Caribbean is a publication of the assistance with the management of national economies. Economic Commission for Latin America and the Caribbean (ECLAC) subregional headquarters for the Caribbean/Caribbean Development and The ECLAC subregional headquarters for the Caribbean also functions Cooperation Committee (CDCC). as the Secretariat for coordinating the implementation of the Programme of Action for the Sustainable Development of Small Island Developing EDITORIAL TEAM: States. The scope of ECLAC/CDCC activities is documented in the wide Director Diane Quarless, ECLAC range of publications produced by the subregional headquarters in Port Editor Alexander Voccia, ECLAC of Spain. Copy Editor Denise Balgobin, ECLAC Coordinator Sheldon Mc Lean, ECLAC Design Blaine Marcano, ECLAC MEMBER COUNTRIES ASSOCIATE MEMBERS: Antigua and Barbuda Haiti Anguilla Cover Photo: Courtesy Pixabay.com The Bahamas Jamaica Aruba Barbados Saint Kitts and Nevis British Virgin Islands Belize Saint Lucia Cayman Islands Cuba Saint Vincent Curaçao Dominica and the Grenadines Guadeloupe Dominican Republic Suriname Martinique Produced by ECLAC Grenada Trinidad and Tobago Montserrat Guyana Puerto Rico CONTACT INFORMATION Sint Maarten ECLAC Subregional Headquarters for the Caribbean PO Box 1113, Port of Spain, Trinidad and Tobago Turks and Caicos Islands Tel: (868) 224-8000 United States Virgin E-mail: [email protected] Website: www.eclac.org/portofspain Islands Issue 3 / July - September 2019 DIRECTOR’S DESK: STRATEGIES FOR INCREASING ECONOMIC RESILIENCE IN THE CARIBBEAN This issue of Focus considers strategies for increasing economic resilience in the Caribbean. Member States are vulnerable to both external economic and environmental shocks, given their small size and openness. ocus therefore examines the use Like tourism, agricultural competitiveness Trade Policy 2019-2023 expresses of two state contingent bond and production has been in decline for the government’s position on Fcontracts that can mitigate the some time. Along with this decline competitiveness and economic and effects of untimely shocks on debt has been an increase in imports of export diversification, incorporates the repayment and limit unsustainable debt semi-processed and processed foods. Sustainable Development Goals, and is accumulation. Caribbean agro-processing has been aligned with the Nation’s own long-term negatively impacted by several challenges, development framework. Consideration is also given to the state chief among them access to finance. of the Caribbean tourism product and to Focus therefore explores the current strategies that might be used to enhance issues in agro-processing financing and productivity of the industry. The looks at several innovative strategies for subregion’s tourism competitiveness has filling the financing gaps. Yours in Focus been in decline, despite the importance of the sector for so many Caribbean This edition also acknowledges member States. We suggest the need for important collaboration between the upgrading and diversification, as a way of Trinidad and Tobago government and revitalising the industry and improving ECLAC Caribbean in producing a trade Diane Quarless competitiveness. policy aimed at structural transformation and growth. The Trinidad and Tobago FOCUS | 3 STRATEGIES TO AVOID DEBT TRAPS AMONG DEVELOPING COUNTRIES AS THEY PURSUE THE SDGS Dillon Alleyne* While historically the accumulation of debt and debt unsustainability was perceived as a developing country problem, in recent years the evidence suggests that the issue is more global, thus demanding renewed efforts to prevent and address its unsustainable build-up. he resolution of the sovereign WHAT ARE SOVEREIGN COCOS? a situation; who validates the trigger debt crisis in Greece and the Given the fact that the major source of mechanism; and whether short term Tevents surrounding the IMF-EU finance among many “so called’ middle treasury bills would be included. One support packages for Ireland, Portugal income countries is the bond market, contentious issue relates to the trigger and Cyprus have indicated that existing any strategy to relieve the pressure being liquidity assistance from the IMF. practices for sovereign debt crisis from bond repayment in the face of Many sovereigns may not be in favour resolution are weak and in need of unexpected shocks is worthwhile to of this option since they may not want reform (Brooke et al 2013). According pursue. to be a part of an IMF stabilisation to UNCTAD (2018), a decade after the programme. In addition, cooperation global financial crisis, global debt levels According Brooke et al (2013) between the creditor and debtor would continue to reach new record highs. It “sovereign cocos” are bonds which be necessary to avoid arbitrary rollover is estimated that by the end of March automatically extend their repayment requests. 2018, global debt stocks had reached maturity when a country receives US$247.2 trillion, up from US$168 official sector emergency liquidity This approach implies some amount of trillion at the onset of the financial crisis assistance. This would be stipulated at burden sharing between the sovereign of 2007–2008.1 This has been attributed the signing of the bond contract and (the taxpayer and creditors, usually the to systemic factors among which are become part of the agreement among private sector) which will likely lead to the weak global recovery, the slump in the parties. If all or part of the debt more cautious lending. There may also prices of primary commodities and a stock came under such a regime, then be the possibility of increased premiums lack of concessional finance to middle all or part of the amortization profile as creditors factor in additional costs to income developing countries.2 of the repayment would shift forward their portfolio. This is counterbalanced without the necessity of permission by reduced risks due to a reduction Closer to home, while the debt ratios from bondholders.4 There are pros in unexpected default. Let us now in the Caribbean are quite high (70% and cons to consider whether such consider GDP linked bonds. of GDP on average), the issue has not agreements should be standardised or received the attention it deserves at tailored to the specific circumstances WHAT ARE GDP LINKED BONDS? the international level. The objective of individual countries. In any case, of this article examines two types of over time, there will likely emerge a set According to Jones and Sharma