FILE COPY ReportNo. 3011-CRG CaribbeanGroup: CurrentSituation and Prospects Public Disclosure Authorized

June3, 1980 Latin Americaand the CaribbeanRegional Office

FOR OFFICIALUSE ONLY Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

Documentof the WorldBank

Thisdocument has a restricted distribution and may be used by recipients only in the performance of their official duties. its contents may not otherwise be disclosedwithout World Bankauthorization.

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TABLE OF CONTENTS

Page

I. THE CARIBBEANECONOMIES IN 1979 . . 1

A. The CommonwealthCaribbean . . 1

B. ...... 4

C. ... 4

D. ...... 4

II. EXTERNAL FINANCING ...... 6

III. REGIONAL PROGRAMS ...... 10

A. ...... 10

B. Export Promotion...... 11

C. Private Sector ...... ,,,,,,,,,,,,,, 11

D. Energy ...... ,,,,,,.,,,,...... , 12

E. ,,,,,,... 13

F. Transportation...... 14

G. Special Programs for the ECCM Countries . . 15

IV. THE FUTURE OF THE CARIBBEAN GROUP ...... 21

Thisdocument has a restricteddistribution and may be usedby recipientsonly in the performance of their oMcialduties. Its contentsmay nototherwise be disclosedwithout World authorization.

I. THE CARIBBEAN ECONOMIES IN 1979

1. The Caribbean economies performed unevenly in 1979. Although the world market conditions for major traditional Caribbean exports ranged from adequate to good, manufactured exports grew rapidly, and the tourist trade reached unprecedented heights, the development efforts of the Caribbean countries--dependent heavily on imported oil to satisfy their energy needs-- were thwarted by the increase in oil prices. Neverthless, Bahamas and , with their strategy of export-oriented growth continued to enjoy able economic management, and attained satisfactory levels of economic performance. Their strong reliance on the private sector also contributed to such performance. and , on the other hand, continued their balance of payments adjustment programs without much success, partly as a result of exogenous factors such as the increase in oil prices and adverse weather conditions. The economic performance of the CARICOM LDCs (two of which suffered major natural disasters) was uneven, but, overall, rates of growth tended to decline, and public finances weakened. The Dominican Republic achieved positive growth and was able to reduce the balance of payments current account deficit as a result of higher export prices and volumes and of substantial foreign aid, in spite of its heavy dependence on imported oil and of the losses caused by Hurricanes David and Frederick. Haiti, the poorest of the Caribbean countries, has started anew an effort to improve its public finances management and to adjust its economy to the changes in international prices by agreeing to a new arrangement with the International Monetary Fund. Finally, Suriname has managed to maintain a modest growth rate, partly owing to continuing substantial external support. On the whole, the last twelve months have been difficult for most of the Caribbean. An unfavorable international economic environment, combined with- -in many countries--strained domestic political situations have resulted in a lower-than-expected level of overall economic performance. For the immediate future, the required additional adjustments will have to be adopted jointly with bold, export-oriented development strategies, in order to avoid the political and economic consequences of further substantial declines in standards of living. This will of course require substantially increased external financial and technical support.

A. The Commonwealth Caribbean

2. The economy of continued performing satisfactorily. The economic expansion experienced in 1978 continued in 1979, when real GDP growth is estimated at about 7%, as tourist arrivals increased further and construction activity revived strongly after a decade of stagnation. The economic growth of the last two years has reduced the high rates of unem- ployment which developed during the slow growth period of the mid-1970s. The construction boom, however, encountered shortages of skilled craftsmen while unemployment persists at high levels in the 16-24 year age group. Public sector savings increased from 5% of GDP in 1978 to 7% in 1979, as a result of improved performance by both the Central Government and the public corporations. The current account of the balance of payments showed a surplus - 2 -

equivalent to 4.7% of GDP, that is about two percentage points less than the preceeding year, reflecting the sustained growth of tourism and commodity exports that 'ompensated a substantial part of the increase in the value of imports.

3. In 1979, the repeated its strong performance of the previous year. Real GDP grew by 6.5%, as a result of record tourist arrivals, continued growth of manufactured exports, the recovery of production, and a construction boom. The deficit in the current account of the balance of payments rose to about 3% of GDP, reflecting the increase in the volume and prices of imports, that outstripped the otherwise satisfactory growth of export earnings. Public sector savings remained at high levels, over 6% of GDP, for the second consecutive year. The expansion of economic activity led to significant gains in tax collections, large enough to offset the increase in current expenditures and in the deficits of some public enterprises.

4. The performance of the was again disappointing in 1979. Real GDP fell about 2%, reflecting declines in /alumina output as a result of a five-week strike, adverse weather conditions that affected the output of both and sugar, and an acute shortage of foreign exchange that reduced the availability of crucial imported inputs, thus limiting production. The deficit in the current account of the balance of payments increased sharply, to about 13% of GDP, partly because export earnings fell, but, foremost, because of the increase in import prices, and among these, especially, the price of oil. The oil import bill increased from US$67 million (13% of GDP) in 1978, to US$90 million (16% of GDP) in 1979. Fiscal performance also weakened, as increases in tax revenues and in the prices charged by public enterprises were not enough to offset the increase in current expenditures, and public sector savings fell from 5.4% of GDP in 1978 to 1.9% of GDP in 1979. At the end of 1979, the Guyanese economy did not satisfy the performance tests that had been agreed with the IMF under the Extended Fund Facility. The Government has now prepared a new investment and financial program, which is expected to provide the basis for negotiating a new arrangement with the IMF.

5. The performance of Jamaica's economy has been, on the whole, disap- pointing. In part, this has been due to exogenous factors, such as the mid- year floods that affected agricultural production and exports, and the increase in oil prices, that aggravated the foreign exchange shortage. But economic performance also reflected insufficient confidence on the part of the private sector and weak economic and financial management in the public sector. As a result, real GDP growth was negative (-2.0%) for the sixth consecutive year, the deficit in the current account of the balance of payments increased to 6.8% of GDP, and public sector savings were even more negative than the previous year, reaching -5.3% of GDP. By the end of 1979, Jamaica did not meet the tests that had been agreed with the IMF under the Extended Fund Facility. The Government decided in March 1980 not to pursue further negotiations with the IMF and to seek alternative sources of financing. A new short-term economic program is now being prepared, while some long-term development policy decisions appear to have been postponed until after the elections which are expected to take place later this year. - 3 -

6. The economic situation in the LDCs has, on the whole, evolved less favorably than was envisaged by the Second Meeting of the Caribbean Group. In a number of instances this resulted from natural disasters, such as the devastating hurricane in and the volcanic eruption in St. Vincent. Less seriously, unfavorable weather conditi -is contributed to slow economic growth in the Leeward . Nevertheless, a good deal of the slow economic progress stemmed from continuing weaknesses in public finances and public administration, which served as constraints on development efforts. Political changes, and the instability they engendered, in several instances precipitated a decline of confidence resulting in a slowdown of private sector investment. Taking the LDCs as a whole, public sector capital investment in 1979 was also below the level projected in last year's economic reports. Although external capital inflows to the public sector were substantially higher than in the preceding year, they were below earlier expectations. As a consequence of all the above events, GDP growth rates were on the whole disappointing as compared with 1978.

7. Starting with the Leeward Islands, Antigua experienced zero economic growth, as compared with a 5% growth in GDP the preceding year. This was brought about by continuing decline in agriculture which, was partly compensated by an increase in tourism. The state of public finances showed some further deterioration. A major weakening took place in Central Government finances, but was somewhat mitigated by an improvement in the finances of the state economic enterprises. St. Kitts experienced a 2% growth in real GDP and the state of its public finances remained roughly the same as in the previous year. , the smallest of the three Leeward Islands registered a 5% increase in real GDP, largely as a result of increased activity of construction for retirement tourism in which it specializes. Its public finances also remained in roughly the same condition as in 1978.

8. Turning now to the , St. Lucia registered zero to possibly a slightly negative GDP growth. This was some 5 to 6% below the growth rate during the preceding year. The public finances also deteriorated, and public sector savings, which had been positive for a number of years, disappeared in 1979. The rate of growth of GDP in is estimated at about 2% in 1979 as compared with 5% in the previous year. Public finances registered some improvement and public sector savings turned somewhat positive. Dominica, one of the poorest of the LDCs, was battered by Hurricanes David and Frederick. As a result of this natural calamity as well as civil and political strife, GDP is estimated to have dropped by as much as 17% below that of 1978. With this declire in GDP, public finances, which had been in a precarious condition previously, were severely affected. Only the generous response on the part of many donors managed to render the fiscal situation viable. St. Vincent was another of the islands hit by natural disaster. The eruption of the La Soufriere volcano adversely affected the banana crop, which is both the most important agricultural product as well as the largest single export. Although the rest of the economy did rather well, especially tourism, the effect of the volcano in lowering agricultural production resulted in a slightly negative GDP growth rate. The fiscal situation, which had been shaky previously, deteriorated further.

9. continued on its path of economic progress during 1979. However, its rate of economic growth was only 3.3% as compared with 5% in 1978 because of poor agricultural weather. Public finances remain sound, and - 4 -

positive public sector savings were maintained, as a net result of a substantialimprovement on the part of the state economic enterprisesand of a deteriorationin the Central Governmentbudget.

B. Dominican Republic

10. The Dominican Republic has been recovering rapidly from the hur- ricane damage suffered during 1979. This recovery has been assisted by substantial external aid, by the success of the Emergency Reconstruction Program in restoringessential infrastructure and rehabilitatingagriculture, and by favorableexport prices. GDP growth during 1979 has been estimatedat 3 to 4%, comparedwith a revised estimateof 2.3% for 1978. The deficit in the current account of the balance of payments was contained at US$320 million, but there was a further loss of about US$90 million in reserves. Public sector savings fell in 1979 both absolutelyand in relation to GDP, mainly as a result of increases in salaries in Central Government.

C. Haiti

11. Economic activity in 1979 suffered the combined effect of poor weather and of the downswing of the two-year coffee productioncycle. As a consequence,the volume of agriculturalproduction and exports fell. Fur- thermore,low private and public investments,private capital outflows, and a fall in terms of trade restrained real income growth. Haiti was able to compensate for its poor harvests through imports paid by net transfers and grants and, consequently,to stablize domestic expenditureswithout serious balance of payments disequilibria. Meanwhile, the Governmentcarried out the first stage of a major fiscal reform by consolidatingin the Treasury a large number of earmarked revenues and is taking additional monetary and fiscal measures agreed upon with the IMF in the context of the Extended Fund Facility arrangement. Progress in applying the fiscal reform to the allocation of expenditures was less satisfactory inasmuch as several major public investmentsnot contemplatedin the budgetary or planning process were under- taken on an ad hoc basis.

D. Suriname

12. Economic performance in Suriname deteriorated slightly in 1979. Preliminaryestimates indicate that the rate of growth of real GDP declined about 3%. The deficit in the current account of the balance of payments remained relatively constant at about 4.2% of GDP. Public sector savings declined, from 2% of GDP in 1978 to 1% in 1979, mostly as a result of increases in wages of public employees. Table 1: CARIBBEANECONOMIES - SELECTED INDICATORS

GDP GDP Growth BOP Current Account as % of GDP Public Sector Savings as % of Averagea/ Averagea/ Averagea/ 1976-78 1978 1979 1976-78 1978 1979 1976-78 1978 1979 Commonwealth Caribbean 5.2 6.8 Bahamas 5.2 7.0 7.0 8.1 6.9 4.7 3.7 2.6 6.6 6.3 Barbados * 4.2 5.4 6.5 -5.7 -0.9 -2.7 1.9 Guyana -1.0 -1.0 -1.9 -19.5 -5.5 -13.4 1.7 5.4 -3.1 -5.3 Jamaica -4.0 -1.7 -2.0 -6.3 -5.1 -6.8 -4.5

LDCs -3.6 Antigua .7 5.0 0 -11.3 -10.9 -10.9 -1.5 -1.0 3.9 3.7 Belize 5.0 6.5 3.3 -19.2 -12.8 -28.5 2.7 -6.6 -20.0 Dominica 3.9 3.9 -17.0 -14.9 -15.4 -24.5 -6.7 -5.0 1.4 Grenada 6.7 5.4 1.9 -1.8 -8.6 -8.0 -3.7 -2.1 Montserrat -2.5 0 5.1 -37.9 -43.6 -60.0 -2.6 -3.2 3.4 St. Kitts-Nevis 2.1 4.5 2.0 -15.6 -17.0 -14.8 9.0 3.9 0.7 St. Lucia 13.0 11.8 -0.7 -25.0 -32.0 -17.0 2.9 3.6 -1.0 St. Vincent 8.9 14.6 -1.0 -12.6 -4.4 -30.0 0 3.1

7.3 3.8 2.4 Dominican Republic 3.9 2.3 3.7 -6.7 -8.0 -5.7 2.2 2.3 0.5 Haiti 3.3 5.3 1.7 -2.6 -3.2 -4.5 2.0 1.0 Suriname 5.7 3.9 2.8 -7.0 -4.8 -4.2 -0.4 II. EXTERNAL FTNANCING

13. The external community has, by and large, made available to the Caribbeanthe financialassistance envisaged at the time of the Second Meeting of the Caribbean Group, held in June 1979. But such assistancehas not been large enough to meet the needs of the countriesof the area. This has been so owing to the sharp deterioration of the terms of trade of most of these countries,largely determined by the oil price increaseswhich has taken place since June 1979, and also, in some countries,to the effect on the balance of paymentsof natural disasters,of a weaker-than-expectedeconomic management, and/or of domestic political difficulties.

14. Table 2 summarizes the latest estimates of commitments and dis- bursementsof CDF-type financing for the July 1979-June1980 period. Table 3 shows preliminaryestimates of the requirementsfor the Third CaribbeanGroup year (July 1980-June1981), which reflect the sharp increase in such require- ments determinedby the variables referred to in the previous paragraph. The investmentand financialprograms and the macroeconomicassumptions on which these figures are based, are consistentwith the analysis presented in the individualcountry economic reports which are also being submitted to the Third Meeting of the CaribbeanGroup.

15. It should be noted that the estimates of requirements shown in Table 3 for the two largestrecipients of external financialassistance in the region--Jamaicaand theDominican Republic--are still highly tentative. Those two countries have not yet completed the preparationof overall adjustmentand developmentprograms. If such programs were prepared, and supported by the IMF, the CDF-type financingrequired by the region from other sourceswould be reduced from the US$723 million shown in Table 3 to about US$500 million-- still some US$220 million more than the amount estimated to have been disbursed in the 1979-80 CDF year.

16. It should also be noted that Tables 2 and 3 incorporate some accounting changes concerning the definition of CDF-type financing,with a view to overcoming some inconsistenciesin the definitionused in previous years. Project financing for the larger countrieshas traditionallycovered the foreign exchange costs of specific investmentprojects and only some minor proportionof local costs. The CDF was establishedlargely for helping those countries meet local costs that they were unable to finance, owing to the financialdifficulties faced by most of them. Meanwhile, project financing for the LDCs--largelyprovided until recently by the UK, and --was already covering close to 100% of project costs. The new definition of "CDF-type" financing used in Tables 2 and 3 includes a preliminary estimate of all foreign financing of local costs of investment projects,as well as of long-termbalance-of-payments assistance not directly linked to specific projects. In particular,the benefits emerging from the promotion of external assistance through the Caribbean Group for the LDCs should be measured by the increase being achieved in overall external assistance, rather than by the amounts pledged for them within the CDF frameworkalone. - 7-

17. As indicated in Section IV below, while CDF-type financing will continue to be a major focus of attention in the Third Meeting of the Caribbean Group, there is also a need to place increased emphasis within the Group framework on long-term project financing. Starting with the Third Meeting of the Group, it would be most desirable if donors could make known their intentions concerning all types of external assistance for each Caribbean country, and for the region as a whole. This, coupled with the periodic reporting by donors of their operations in the region--also proposed in Section IV--should make it possible in the future to present a more comprehensive and detailed picture of the external assistance provided to the Caribbean. It should also facilitate the gradual evolution of the Caribbean Group towards a more traditional form of Consultative Group, where the main focus would be in the long-term development requirements--both, domestic and external--of the Caribbean countries. Some more detailed information on external financial flows is now being gathered and analyzed by the Bank and will be included in supplementary tables which will be distributed at the Third Caribbean Group Meeting. a/ Table 2: CARIBBEANDEVELOPMENT FACILITY;- COMHITMENTSAND DISBURSEMENTS

Undisbursed COMMITMENTS DISBURSEMENTS as of FY78-79 FY79-0 Total FY78-79 FY79-80 Total June 30, 1980 Commonwealth Caribbean

Barbados 4.9 4.7 9.6 1.0 1.8 2.8 6.8

Guyana 26.5 12.4 38.9 18.4 16.6 35.0 3.9

Jamaica 56.1 143.7 199.8 32.6 104.8 137.4 62.4

LDCs 15.9 44.0 59.9 13.0 30.6 43.6 16.3

Dominican Republic 88.1 94.9 183.0 35.2 117.0 152.2 30.8

Haiti 13.0 14.0 27.0 12.0 13.0 25.0 2.0

Unallocated 12.5 12.5 12.5

Totals 204.5 326.2 530.7 112.2 283.8 396.0 134.7

a/ Includes CDF pledges at the CG meeting and CDF-type assistance commited during the . Table 3: ESTIMATES OF EXTERNAL PUBLIC CAPITAL REQUIREMENTS FOR 1980/81

(US$ million)

Total CDF Type Inflows Required Carryover to CDF-type Country External Non-CDF Total from previous from New FY81/82 of Commitments for Inflows Type Commitments Commitments FY80/81 FY80/81 Required in Required Commitments June 1980

(a) (b) (c)=(a)-(b) (d) (e)=(c)-(d) (f) (g)=(e)+(f)

1. MDCs

Barbados 36.0 21.0 15.0 6.8 8.2 6.8 15.0 Guyana 132.0 72.0 60.0 3.9 56.1 5.0 61.1 Jamaica a/ 540.0 145.0 395.0 62.4 332.6 67.4 400.0 Subtotal 708.0 238.0 470.0 73.1 396.9 79.2 476.1

2. LDCs 88.4 62.5 25.9 13.4 12.5 21.0 33.5

a. ECCM 61.4 42.3 19.1 9.8 9.3 13.1 22.4 '

Antigua 10.0 7.5 2.5 2.3 0.2 3.0 3.2 Dominica 11.9 6.7 5.2 2.0 3.2 0.4 3.6 Grenada 11.1 7.5 3.6 1.0 2.6 2.0 4.6 Montserrat 3.5 2.5 1.0 0.5 0.5 0.8 1.3 St. Kitts-Nevis 7.1 5.3 1.8 1.2 0.6 2.3 2.9 St. Lucia 8.2 6.1 2.1 1.2 0.9 2.8 3.7 St. Vincent & Grenadines 9.6 6.7 2.9 1.6 1.3 1.8 3.1

b. Belize 27.0 20.2 6.8 3.6 3.2 7.9 11.1

3. Dominican Republic 353.0 167.0 186.0 30.8 155.2 25.0 180.2

4. Haiti 157.0 115.8 41.2 2.0 39.2 5.0 44.2

Total 1306.4 583.3 723.1 119.3 603.8 130.2 ?34.0

a/ Estimates based on present government program. - 10 -

III. REGIONAL PROGRAMS

18. Concerning the promotion of regional programs, the second year of the Caribbean Group has largely been a period in which the initiatives preliminarilyapproved in the June 1979 Caribbean Group meeting and in the November 1979 meeting of the Ad Hoc Advisory Committee, have been further elaboratedand, in most cases, brought to an operationalstage in which they are ready to be financed by participantdonors in the immediatefuture. This section includes a brief summary of the status of the main approved programs. In some cases, separate papers will present a more detailed description of such programs for considerationby interested donors. Section IV of this report will suggest some ideas on how to proceed in the future with regional programs and with other aspects of the Caribbean Group work.

A. Tourism

19. At the Second Meeting of the Caribbean Grbup for Cooperation in EconomicDevelopment, it was agreed that the and UNDP, jointly with the Caribbean Tourism Research Centre (CTRC), the Caribbean Tourism Association(CTA) and the Eastern Caribbean Tourism Association (ECTA),would review the problems of regional tourism promotion and make recommendations with respect to undertakinga joint promotional effort. As a result of the review, a paper was presented to and accepted by the meeting of the Ad Hoc Advisory Committee on November 16, 1979.

20. The paper proposed that the Caribbean Tourism Association (CTA) should continue to have the major responsibilityfor promoting the Caribbean as a regional destination, but that special measures would be needed to promote the less developed countries (LDCs) either through an expanded and strengthenedEastern Caribbean Tourism Association (ECTA) or through special sections attached to the CTA offices in North America and . In addition, it was proposed that certain technical assistance functions and studies should be handled by the Caribbean Tourism Research and Development Centre (CTRC).

21. The entire program was estimated to cost some US$15.65million over a five-yearperiod, for which donor contributionsof some US$8.55 million were recommended. The balance of the funding for the programwas expected to come from Caribbean Governments (US$4.0 million) and from the private sector in the form of increased membership dues and participations in joint trade promotions (US$3.1million). The part of the program relating to promotionof the Caribbean as a whole was estimatedto cost US$8.0 million, the program for the LDCs to cost US$6.8 million and the research program US$750,000. The balance--US$100,000--was estimated to be needed over five years to finance the work of an International Coordinating Committee which it was proposed should be established to supervise the implementation of all parts of the program.

22. Subsequently, a further paper proposing additional studies to be carried out by the CTRC was presented to and accepted by the meeting of the Ad Hoc Advisory Committee held on May 8, 1980. This paper proposed five studies of priority aspects of the impact of tourism on the development of Caribbean - 11 - economies and estimated the costs of these studies at US$1.2 million, to be spent over a three-year period. Together with the work proposed to be under- taken by the CTRC under the expanded program of regional tourism promotion, the cost of the CTRC program was estimated at US$1.9 million.

23. Discussions have been initiated to secure financing for the proposed programs in tourism. The Commission of the European Communities (CEC) has expressed interest in financing components of the programs, but there is still need to find financing from other sources, particularly for expenditures on tourism promotion to be incurred in North America. A paper combining the proposed programs of regional tourism promotion and economic and social impact studies is being distributed separately.

B. Export Promotion

24. The World Bank and the International Trade Centre presented a regional export promotion program to the November 16 meeting of the Ad Hoc Advisory Committee, which contained recommendations for changes in the system of export incentives and proposals for marketing studies, a regional export potential survey, the strengthening of trade information services, and the development of regional training programs. The Committee recommended further exploration of the impact of tariff barriers on the export potential of the region. It also suggested that the export product list be expanded to include additional products and that there is a need to develop export credit schemes. The Committee emphasized that export promotion efforts be directed at existing productive activities as well as at attracting new investment. It also noted the importance of coordinating regional efforts in export promotion with existing national programs.

25. The UNDP and EEC have both expressed interest in financing part of the proposed program. The World Bank and CARICOM have agreed to act as executing agencies for the portion of the program which would provide technical assistance to the Caribbean region for revising export incentives, jointly with a study of CARICOM's tax harmonization system; while UNDP is expected to finance part of these studies, there will be a need for financial support from other donors. The International Trade Centre has also expressed its willingness to being executing agency for the balance of the program, and has prepared a separate paper on their activities in this respect, which is being distributed to the members of the Caribbean Group.

C. Private Sector

26. Following the agreements reached in June 1979 by the Caribbean Group, the Ad Hoc Advisory Committee appointed last November a Task Force on Private Sector Activities chaired by Arthur Brown, Deputy Administrator of the United Nations Development Programme. The main objective of the Task Force was to provide the Caribbean Group with an analysis of the structure, role, and needs of the private sector in the Caribbean and with regional and national proposals to promote private sector activities. Most of the appointees to the Task Force are from the private sector of various countries in the Caribbean, and serve in a personal capacity.

27. The Task Force has accomplished its review with the technical assistance of IFC. IFC has arranged for missions to visit the countries of - 12 - the region. The reports prepared by these missions have been reviewed in detail by the Task Force. The Task Force has met three times over the course of the year, and its report is also being distributed to the parti- cipants in the Third Caribbean Group Meeting. The recommendations contained in the Report give special attention to the removal of impediments to private sector development and to the adoption of new measures--at the national and regional levels--to stimulate such development. Given the importance of the Task Force report, it should become a major focus of attention--byboth, the Caribbean countries and the donor community--duringthe Third Group meeting, with a view to ensuring the implementationof its recommendations.

D. Energy

28. The IDB has prepared a regional survey of energy projects which is being distributed separately to the participantsin the Third Meeting of the Caribbean Group. The survey is expected to provide a useful basis to evaluate energy programs and to coordinate international assistance efforts.

29. World Bank missions have visited several countries of the region over the last few months to review a possible program to accelerate oil and gas exploration and development. The missions identified country needs for technical assistance including assistance in their oil and gas explo- ration development, and in the preparation of legislation and training. They evaluated the existing data base and reviewed the geological potential for successful hydrocarbon development. As a result of these missions, a program has been already prepared, covering the following main activities:

(a) Geological data gathering, evaluation and bid evaluation assistance;

(b) Technical assistance for monitoring the activities of foreign oil companies;

(c) Technical assistance for preparing and/or revising legislationand regulations;

(d) Training and explorationactivities; and

(e) Special geological and other studies.

UNDP and the OPEC Fund have indicated preliminary interest in financing the proposed project and the World Bank has expressed interest in being the executing agency. A preliminary project document was discussed recently by the OPEC Fund. Taking into account the OPEC Fund comments,the final draft of the project document is now being prepared,and will be submittedby the World Bank and the UNDP to the OPEC Fund in the immediate future. - 13 -

E. Agriculture-/

Agricultural Research

30. Following the recommendations of the World Bank report "Regional Agricultural Development and Production in the Caribbean" (Report No. 2064-CRB), presented to the First Meeting of the Caribbean Group, the Technical Assistance Steering Committee initiated a survey in early 1979 of national and regional research institutions in the region in order to draw conclusions on the quality and relevance of the research program and to make recommendations on ways of expanding research, improving its quality and encouraging its more effective use. The FAO, in cooperation with IICA, CDB, and the CARICOM Secretariat, undertook the survey with financing from UNDP. A report of the survey, which is being finalized, makes several major recommendations.

31. The principal recommendation is to establish a Caribbean Agricultural Research Coordinating Committee (CARCC), which would coordinate the planning and the financing of a regional agricultural research program which would include national programs, cooperation in this field among Caribbean countries, and cooperation between the region and the international agricultural research institutions. The membership of the CARCC would include national directors of agricultural research and representatives of Caribbean regional institutions. Associated members will include several International Research Centres (CIMMYT, CIAT, and CATIE), FAO and the World Bank. The CARCC will hold at least one meeting a year and have an executive secretariat staffed by an experienced agricultural scientist, with funds for consultancy services to formulate cooperative research program. The estimated annual cost for this CARCC Secretariat and for the annual meeting of CARCC is estimated at $130,000. Financial assistance for the first two years is being requested from the donor agencies of the Caribbean Group.

32. Among other recommendations, the Report also proposes:

(a) strengthening--with increased support by the CARICOM Governments and by the donor community--the research and development activities of the Caribbean Agricultural Research and Development Institute-- particularly in connection with the LDCs--and of the University of the --especially concerning its program on major food crops;

(b) establishing a training program for managers of agricultural research; and

(c) starting several regional research programs, as soon as CARCC is established, including those related to , banana and plantain, , ruminant livestock, the Jamaica Red Poll, and sheep breeding.

1/ The programs on agricultural research and marketing referred to here are described in more detail in the "Status Report on Caribbean Regional Technical Assistance Projects" submitted by CDB to the Third Caribbean Group Meeting. - 14 -

AgriculturalMarketing

33. The CDB, on behalf of the Technical AssistanceSteering Committee, convened a Conference on AgriculturalMarketing on April 21-23, 1980. The Conference was attended by Government officials and by representativesof regional and international institutions and of the private sector. The Conference made recommendations concerning, inter alia, financial and technical assistance, marketing information, pricing policies and sea transportation of agricultural projects. In particular, it identified several areas in which external support is likely to be required, including the improvement of the operations of National Marketing Boards, the strengthening of private traders' activities in export agriculture, the establishmentof marketing informationsystems, the improvementof ports and airports facilities,the improvementof small vessels for the transportation of agricultural products, and the establishmentof a market research and export promotion unit in the Caribbean Food Corporation.

F. Transportation

34. The Group was informed at its Second Meeting in June 1979 that of the eight regional technical assistance projects in transportationprepared by the TechnicalAssistance Steering Committee all but two were in different stages of implementation. A separate report on the implementationof ongoing projects is being prepared and will be distributedat the Third Meeting of the Caribbean Group. Since the Group's last meeting there have been several developments in the implementation of these projects, including the following.

(a) Caribbean Regional Shipping/Small Vessels and Schooners. The CARICOM Standing Committee of Ministers for Transportationat its meeting in December 1979, endorsed the project and agreed on locating the headquartersof the project in St. Lucia. UNCTAD and IMCO which are jointly executing the project are in the process of recruitingfour experts and the first should be in post within the next month. The three-year project, which has a total budget of $836,000 to be financed by UNDP, will initially give priority attention to the improvementof the operation of the small vessel fleet in the Eastern Caribbean by introducinga financing scheme for repairing and improving vessels and improved technical standardsof safety and maintenance.

(b) Shipping Statistics for the Caribbean. This project, executed by ECLA, with financingfrom UNDP, is in the final stages of completion and will provide shipping statisticsfor the period October 1977 to September1978 for most countriesin the region. The data collected includes ship name, vessel size, origin port, destination port, commodityand weight. The data is expected to provide an important input to the Caribbean ContainerDistribution and Load Centre Port study and future maritime planning work to be undertaken by the Caribbean Shipping project.

(c) Port Authority Legislation. The CDB and UNCTAD signed an agreement last March to undertakea seven week study scheduledfor completion - 15 -

in June 1980. Three consultants, one from UNCTAD and two from IMCO, are carrying out the study which will identify the main priorities for economic, commercial and technical improvement of Caribbean port authorities in areas such as port organization, structure and legislation; port regulations; financial and tariff policy; planning, and maintenance.

(d) Caribbean Airport Maintenance and Operations Study. The International Civil Aviation Organization (ICAO), under subcontract from the CDB with financing totalling $297,000 provided by CDB, IDB and UNDP, began work on the project in September 1979 with the fielding of a team of consultants comprising an aerodrome engineer, a fire-fighting and rescue specialist and a financial adviser. The team has completed its assessment of the maintenance of facilities and the organization, management and staffing of 14 airports in the region and has several more to visit. Its preliminary findings suggest that capital costs of between $3.6 and $5.6 million are likely to be needed for adequate fire and rescue services in these airports. It has also identified further technical assistance requirements in their organization and management.

(e) LIAT Fleet Requirements and Routing Structure. The European Development Fund has agreed to finance the study which commenced in March 1980. The study is expected to be sufficiently exhaustive to allow immediate decisions concerning investments in the equipment requirements of the Company including the replacement of aircraft.

(f) Caribbean Container Distribution and Load Centre Port Study. Financing for this study will be sought from the European Economic Community. The proposal has been submitted to CARICOM for its consideration and eventual inclusion in the list of projects to be submitted to the EEC for financing.

(g) Establishment of a Caribbean Air Transportation Council. This proposal was submitted to the CARICOM Secretariat for consideration by the CARICOM Standing Committee of Ministers of Transportation at its meeting in December 1979. However, the Council has yet to take a decision on this matter.

G. Special Programs for the ECCM Countries

Agricultural Input Supplies

36. In last year's Economic Survey of the ECCM Countries, it was proposed that a regional revolving fund be established to finance importation of agricultural inputs in order to help raise agricultural production levels. There was consensus on the need to establish a scheme to increase the supply of such inputs. The scheme, combined with a program to correct other technical, institutional and policy deficiencies, was expected to make a lasting contribution to the agricultural development of the ECCM countries.

37. After endorsement of the proposal at the June 1979 CG-CED meeting, two UNDP/IBRD missions visited the region. The first assessed overall - 16 - requirementsand possibilities;the second examined the feasibilityfor early action programs in the most promising areas. Efforts were concentrated initially on developing Input Revolving Funds (IRFs) in each of the Windward countriesas a componentof a comprehensivebanana developmemtprogram in that sub-region. This was visualized as the first phase of a longer term program to establish national IRFs which would serve the entire agriculturalsectors of the countries. After experience is gained, each IRF could serve as an organizingpole for input supply schemes that incorporatedother commodities. However, even before the developmentof national multi-commodityIRFs, there would be scope in the immediatefuture for various local growers' associations to cooperate jointly in storage, transport and tendering for inputs.

38. Whereas the June 1979 proposal had been considered an opportunity to make a prompt impact on agriculturalproduction through the provision of inputs on a regional basis, examinationin the field showed that this was not practicableat the present time. It was the view of officials consulted that regional institutional arrangements and policy harmonization would be required to a greater degree than is currently feasible.

39. The banana industry was judged as the most promising one for the establishmentof IRFs because:

(a) Each Windward country is heavily dependentupon bananas as a source of income, employment and export earnings. There is an immediate assured market for increased shipments of 50,000 metric tons per annum which, at current prices, would earn about EC$45 million.

(b) Bananas are a precarious crop whose yield is highly dependent upon an adequate supply of fertilizer, chemicals to control diseases, and sound cultivationpractices.

(c) In addition to providing income and employment, bananas support tree and other crops through interplanting. An input supply scheme attached to bananas would also benefit other crops and support diversificationprograms.

(d) There is already an organized institutionalframework to which an assistance program can be attached. Individual banana growers' associations (BGAs) coordinate activities through the Windward Islands Banana Association (WINBAN). Current external assistance programs, primarily funded by the , have laid the base for a more comprehensiveprogram. However, UK assistance does not now include fertilizer or other major chemical inputs.

40. For benefits to be meaningful and permanent, a scheme to increase suppliesof inputs would have to be accompaniedby policy actions on the part of governments and by other measures to correct current deficiencies. Progress on such actions must move forward simultaneouslywith an input scheme. Input schemes in the past only permittedthe crops to which they were applied to continue in production at low levels of efficiency.

41. In addition to a steady supply of inputs, the following steps are necessary to correct deficienciesin the banana industry: - 17 -

(a) Input Distribution. A plan needs to be developed and executed to assure that inputs move efficiently from pier to adequate storage facilities and to convenient distribution points in order to make the inputs readily accessible to growers at the times needed.

(b) Management of Growers' Associations. Improvement of BGAs management is crucial. This should include a program to strengthen structures, restaff some positions, improve financial and other controls, and improve management of support services such as disease and fruit quality control. BGAs should also institute cost containment programs at each stage of industry operation in order to increase the return to the grower.

(c) Improvement of Extension Services. Banana extension services are provided under the WINBAN-administered and UK-financed banana development plan but are not effectively reaching a sufficient number of growers nor performing at the standards required by the industry. To accomplish this, closer cooperation should be developed with national extension services. Staff selection should be improved, in-service training intensified and field supervision should be better managed as components of a program to increase motivation. In order to make these and otherimprovements long-lasting, increased budgetary funding is necessary to cover salaries and other recurrent costs adequately.

(d) Banana Delivery System. Cost efficiencies would result from a closer integration between the banana delivery systems and the input distribution systems. Improvements are needed in the location, design, and operation of boxing plants.

(e) Fruit Quality Control. While some improvements have occurred in fruit quality control, substantially more is still needed.

(f) Road Improvements. Steady efforts need to be made to reconstruct and maintain road systems on which bananas can be transported without subjecting them to bruising.

(g) Fertilizer Mixing Plant. The CDB study of the CARICOM fertilizer sector should be completed so that a determination can be made as to the economic feasibility of a mixing plant in the Eastern Caribbean which could import raw materials and provide mixes appropriate to the needs of various crops. This could meet better the needs of the agricultural sector and support diversification, hopefully at lower cost than importing prepared mixes.

42. To enhance the framework for improvements in the banana industry, governmental actions are necessary to remove some fundamental obstacles to agricultural development. The most important of these are (a) improvement of land tenure systems; (b) greater utilization of lands which were formerly farmed on an estate basis or are inaccessible owing to the absence of or poor maintenance of roads; (c) determined pursuit of crop diversification programs to provide alternatives to the limited range of export crops grown in the - 18 - countries. Once the market potential for bananas is reached, and that is likely within several years of an expandedbanana developmentprogram, it will be vital to see that the least efficient banana lands are shifted to other crops.

43. A UNDP/WorldBank mission visited the Leeward Islandsin May 1980 to examine opportunities to provide increased agricultural inputs to those countries. A second mission to the Leeward Islands is planned for early June to furtherexamine the role of agriculturalinputs and the measures necessary to render them effective. At the time of the CaribbeanGroup meeting in late June, it should be possible to consider a program covering the seven ECCM countries,although the specific characteristicsof the part of the program devoted to the Leeward Islands will differ somewhat from the one described above for the Windward countries. In the World Bank's opinion, this program, coupled with some sectoral and macroeconomic policy decisions that are required in each of the ECCM countries,may well make an important contribu- tion toward achieving some of the structuralchanges that are most needed in the Eastern Caribbean--particularlyin connectionwith the urgently needed reconstructionof the agriculturalsector. Under appropriatecircumstances, if agreement is reached on the relevant issues with the ECCM countries,this overall programmight qualify for World Bank Group assistance,with resources provided by IDA through the CDB.

Food Aid

44. The 1979 Economic Survey of the ECCM Countries proposed the establishmentof a special food aid program on a grant basis for the ECCM area. One of the objectivesof such program would be to generate proceeds to help governments finance the local costs of agricultural development programs. At the June 1979 Caribbean Group meeting the delegate of the EuropeanEconomic Communityoffered a programof food aid to ECCM countries in 1980 to meet this objective. The three commodities available for a sales programwere powdered skim milk, butter oil, and grains. Country applications were to be submittedbefore the end of July 1979.

45. Each country submittedits applicationon time for commoditieswith an aggregateestimated value of about US$7.0 million. These applicationshave met a favorablereception by the EEC at the working group level. In May 1980 the Councilof the European Communitywas to consider a recommendationfor the provision of 1,465 tons of skim milk valued at EUA 737,000 and 424 tons of butter oil valued at EUA 511,000. Thus, a total of EUA 1,248,000 in commoditiesmay be made availableby the EEC to the ECCM countries this year. It is not known yet, however, how this will be divided among the countries. Nevertheless, this donation could provide a significant amount of sales proceeds to the ECCM area.

46. A number of issues remain to be resolved to give effect to the program. After acquisitionof the commoditiesby the EEC the first issue will be to arrange for and cover the costs of transportingand distributingthem. Given the relatively small quantities and the seven distinct destinations, shippingcosts may amount to as much as 20% of the EC$4.5 million. EEC policy is to require the recipient countries to cover shipping costs, except in unusual circumstances. Funds are thereforerequired for this purpose in order to avoid serious diminution of the net proceeds available for development activities. - 19 -

47. There is also need to coordinate shipments so they can be grouped to minimize costs. As suggested by the EEC delegate at the June meeting, this would imply close coordination between Brussels and the EEC staff in the area. It has also been proposed that the ECCM Secretariat play a role in administering the program. There is a need for an early start in making arrangements which initially require an examination of (a) the most eco- nomical means of shipment from the European port to each destination, (b) cost sharing among recipients of shipments, (c) routing and scheduling of shipments, (d) packaging requirements, (e) storage capacity at recipient ports, and (f) internal marketing arrangements which fit into local com- mercial practices.

48. In addition, arrangements need to be made for the allocation of the sales proceeds to suitable development purposes. EEC policy as to funds use is rather broad, i.e., the funds are to be used for financing of specific development projects, preferably in the agricultural sector, selected by the recipient country and agreed by the Community. It is hoped that the funds can be channelled into high priority activities where important needs are yet unmet. This might include the coverage of non-capital development expenditures, both for national and regional programs, which cannot be financed from other external sources.

49. It would be opportune for the interested parties, i.e., the European Community and the ECCM Secretariat, to take the lead with recipient countries to commence physical and financial coordination efforts promptly. Suitable coordination must be in place when the commodities are available for shipment. Otherwise there could be serious delay in translating these commodities into development financing funds. This coordination should include the preparation of arrangements for deposit of sales proceeds into a special account established for this purpose. At the June 1979 Caribbean Group meeting, it was suggested that the Caribbean Development Bank or the Eastern Caribbean Currency Authority could play a role in administering such account, and a decision in this respect will be required shortly.

Pools of Experts and Common Services

50. During the past year, important progress has been made to establish a Pool of Experts within the ECCM Secretariat to provide services commonly required by the member countries. A main purpose would be to increase the absorptive capacity of countries to undertake development activities. As indicated in the 1979 Economic Survey of the ECCM Countries, some of the main objectives of the Pool of Experts would be to provide:

(a) operating skills needed in identifying, preparing, and executing development projects;

(b) management support services in such areas as marketing, financial administration, and other institutional matters; and

(c) periodic advisory services in macroeconomic and sector planning.

51. Such approach received support at the June 1979 meeting of the Caribbean Group and the ECCM Secretariat--with support from UNDP, the World Bank, CDB and the CARICOM Secretariat--undertook to define the assistance - 20 -

required with prospective donors. The result has been a clarificationand sharpeningof focus to build up a staff to provide some of the basic services which member countries require to plan and implement developmentactivities. The proposed organizationplan has been revised and recommendationsmade to the ECCM Council of Ministerson an internal salary structure. Assistancehas either been arranged or is the subject of advanced discussionwith various donors as follows:

AgriculturalPlanning: USA

Management Training: Not identified

Project Developmentand Engineering: EEC

Fiscal Policy and Administration ) UNDP Tax Administration ) and Budget Administration: ) Canada

StatisticalServices: UNDP and USA

IndustrialSector: UNDP/UNIDO

52. The Governments of the ECCM countries are scheduled to review the progress made and agree on the extent of financial contributions from their budgets which can be provided to the Secretariat for this purpose. For the Pools of Experts to operate effectively, such local contributionsmust be adequate to cover local administrativecosts and some technicalstaff. On the side of the donors, the services of expatriates need to be accompanied by funds to cover an additonal number of local technical staff who can gain valuable experienceby workitg in a team with seasoned expatriateswhom they would, in time, replace. External assistance would be also enhanced by including supplies and equipment necessary to carry out the activities. - 21 -

IV. THE FUTURE OF THE CARIBBEAN GROUP

53. The Caribbean Group was established in December 1977 to help the Caribbean countries to meet their immediate financial needs and to improve their long-term development prospects. The Group was expected, inter alia:

(a) To promote emergency balance of payments financing;

(b) To promote project-related development assistance;

(c) To coordinate external technical and financial assistance; and

(d) To promote increased regional cooperation.

54. The progress achieved towards those objectives can be summarized as follows:

(a) The Group has succeeded in obtaining pledges for substantially increased long-term balance of payments assistance from bilateral and multilateral donors, in the framework of the CDF. Disbursements from such assistance, however, have been slower than expected owing to: (i) the earmarking of some donors' contributions for specific investment projects; (ii) slow project implementation in some countries, and (iii) the failure of some recipient countries to adhere to viable economic programs.

(b) While CDF assistance has made it possible to execute ongoing projects faster than otherwise would have been possible, the Group has devoted less attention than originally expected to the financing of new projects. This is due mainly to the fact that only a few new projects are being started in most Caribbean countries owing to the restrictions posed by their critical financial situation.

(c) The UNDP--directly and through the Technical Assistance Steering Committee--has played a most useful role in promoting, coordinating and financing technical assistance--including the preparation of regional programs. The Caribbean Group meetings have also been useful for improving the coordination of financial assistance. Both activities, however, need further strengthening through more systematic and continuous aid coordination efforts.

(d) Not much progress has been achieved in promoting regional co- operation among the Caribbean countries. This is due, at least in part, to the difficulties associated with the political and economic situation of the countries of the region, to the lack of complementarity of their economies, and to almost total absence of economic, political and cultural links between the Commonwealth Caribbean and the French-, Spanish-, and Dutch-speaking countries of the area. There are possibilities of fostering Caribbean-wide cooperation--mainly in the promotion of private sector activities, in the development of tourism, and in coordinated national programs - 22 -

in energy, export promotion, agriculture and transportation. Efforts should also be made to identify other areas of Caribbean- wide cooperation. It should be recognized,however, that the most promising regional programs in the immediate future are those at the ECCM level, and, to a somewhat lesser extent, those covering only the CARICOM countries. In terms of regional capital investment projects, the possibilities seem restricted to some aspects of transportation, and to a power grid that might eventually interconnectthe electricalsystems of Suriname,Guyana, and, perhaps, Eastern ,and Northern .

55. In entering the Third Caribbean Group year, it seems useful to consider anew the course of action that should be followed, in the light of the Group's recent experience,and of the overall situationand prospects of the Caribbean region. The following paragraphs include some suggestionsin this respect.

The CaribbeanDevelopment Facility.

56. In view of the continuous deteriorationof the terms of trade of most countriesof the region, the promotion of CDF-type financingwill be a most important objective of the Third Caribbean Group Meeting. As was envisagedwhen the CDF was establishedin 1978, however, this should continue to be considered as a transitionaltype of financing, to be accompaniedby appropriateadjustment programs. Since the formationof the Caribbean Group, the adoption and execution of viable economic programs, directed simultaneouslytoward achieving short-term financial stabilityand promoting long-termdevelopment, have been--and should continue to be--consideredpre- requisites for CDF financing. In the absence of firm commitments in this respect, the Working Group of InternationalFinancial Institutionsmay find it difficult to make positive recommendationsconcerning CDF support during the Third Group Meeting, thus continuing the application of the same principlesagreed upon by the Caribbean Group in establishingthe CDF. The executionof such programs,however, would not be feasibleunless substantial additional CDF-type financing compensates,at least partly, for the sharp deteriorationof terms of trade sufferedby most countriesof the region since June 1979. In this respect, aid programs now being consideredby Venezuela and Trinidad and Tobago--andother similar initiativesthat might be adopted-- might make a substantial contribution toward achieving the original objectives of the Caribbean Group.

Project Financing.

57. If the CaribbeanGroup is to achieve its main long-termobjectives, it is essential to pay increased attention, without further delay, to development financingneeds. This is needed for all countriesof the region, although it might not be possible to do so during the June 1980 Caribbean Group Meeting in the case of Jamaica, owing to the postponement by that country of the definition of its development program until after the forthcominggeneral elections. The priority immediateattention of the Group for project financing is particularly important in the case of very large investmentssuch as the Upper Mazaruni HydroelectricProject and an Aluminum Smelter Project in Guyana, and the Kabalebo Hydroelectric Project in Suriname. The World Bank has examined those projects, considers them - 23 -

technicallyand economicallysound, and is prepared to assist the Guyanese and Surinamese Governments in promoting the required foreign participation. Likewise, if all concerned parties agree, the Bank would also be prepared to promote and coordinate external support for a regional interconnected electrical system linking Suriname, Guyana, Eastern Venezuela and, eventually,Northern Brazil.

Aid Coordination.

58. In view of the experienceof the past two years, the Bank proposes that UNDP be asked by the Caribbean Group to continue promoting and coordinating all regional technical assistance programs to the Caribbean, including the identificationand preparation of new proposals to better utilize already available resources, and to seek additional financing for such programs. These functions, previously performed by the Technical Assistance Steering Committee,will henceforthbe carried out by UNDP under the guidanceof the Ad Hoc Advisory Committeeand in direct collaboration,as required,with the CaribbeanCommunity Secretariat,the CaribbeanDevelopment Bank, the Economic Commission for , the World Bank, and the participating donor countries and international agencies. Within the established framework for coordinatingUnited Nation's system operational activities at the country level, Caribbean governments may also consider seeking the assistance of UNDP in coordinatingother technical assistance provided by donor countries and internationalagencies.

59. Concerning coordination of financial assistance, there is a need for a more efficient and systematicflow of informationamong donors. If all donors would agree to provide a quarterly report of commitments and disbursements--ofboth, project- and CDF-type financing--as well as of problems encountered in the execution of aid programs, the World Bank would process such information and would make it available to all participant donors, and would include it in its annual reportsto the CaribbeanGroup. It is also proposed that the Bank economic missions visiting each Caribbean country convoke informal meetings of donors'field staff and of Government officials to review the executionof projects and of aid programs. Increased aid coordinationwill also be necessary for cofinancing large investment projects such as those referred to in paragraph 57 above.

Regional Programs

60. It seems appropriate at this stage to concentrate the Caribbean Group regionalwork in the implementationof the programs approved last year, referred to in Section III above, including the new regional proposals emerging from the Private Sector Task Force. This approach would avoid spreading the attention of recipient and donors among too many initiatives. It would also be useful to explore whether further external technical assistance is required to strengthen the regional institutions--CDB,ECCA, CARICOM, ECCM. In this connection, the IMF will continue its technical assistanceprogram to strengthenECCA. In view of the expected expanded role of CDB, it might also be necessaryto increase external technical support for that institution. For this purpose, if the CDB considers it advisable,the World Bank could be Executing Agency for a project--perhapsfinanced by several donors--to strengthen CDB's capabilities to undertake country economic work, with a view to gradually transfering to CDB some of the - 24 -

economic work required by the CaribbeanGroup. Similarly,the World Bank and IDB could assist CDB in strengtheningthe technicalresources required to deal with increased project-relatedactivities, and several agencies could help further the CARICOM and ECCM Secretariats. As suggested in paragraph 58 above, UNDP should coordinate all these technicalassistance efforts.

Caribbean Group Meetings

61. During the May 1980 meetings of Caribbean countries and of donor countriesand institutions,a broad consensusemerged on the need to limit the number of meetings held within the Caribbean Group framework to the minimum required to ensure the efficient operation of the Group. It is therefore proposed to hold only the followingmeetings each year:

(a) The Annual Meeting of the Group in mid-year;

(b) A meeting, in November or December,of the Ad Hoc Advisory Committe, with the main purpose of providingguidance to the Group's regional work; some country subgroups that did not meet the previous May or June, might meet at this tile, if all conditions for holding such meetings are fulfilled;

(c) A meeting of Caribbean countries, immediately after the Annual Meeting of the CDB Board of Governors,which is usually held in the Caribbean during April or May; and

(d) A meeting of donor countries and institutions,in the Bank Paris Office, approximatelyone month before the Annual Caribbean Group Meeting.

If special reasons emerge for holding additional meetings of the Ad Hoc Advisory Committe,such meetings would be held at the time of the CDB Board of GovernorsMeeting, or immediatelybefore the Annual Caribbean Group Meeting.

62. The World Bank's overall experience with ConsultativeGroups, and the experience of the Caribbean Group itself, indicate that there is no compellingreason for holding a subgroupmeeting for each countryevery twelve months. Such country meetings are useful only when there are programs to be presentedmeriting external supportor when there are problems that need to be reviewedjointly. Those countrieswhich need substantialCDF financing may require annual meetings. But those with mostly project-relatedneeds may only requiremeetings every 18 or 24 months. On the other hand, there may be a need for specialurgent meetings on specific countries,which should not wait for the annual CaribbeanGroup session. It is therefore proposed to adopt a flexible approach concerning subgroups' meetings. In order to avoid the proliferationof meetings throughout the year, it is also proposed that all subgroupmeetings be held, as suggestedin the previous paragraph,at the time of the annual Group meeting (May or June) or of the meeting of the Ad Hoc Advisory Committee (Novemberor December).