PORT OF SPAIN, Trinidad (GINA) -- The Caribbean Community (CARICOM) is seeking international support for a new economic model which President Bharrat Jagdeo says is needed to meet the peculiarities of the region.
Backing for the new model is being canvassed and United Nations Secretary General Ban Ki-moon and the heads of several multilateral financial institutions are to join CARICOM leaders in Dominica in March to discuss it, President Jagdeo told reporters here.
Jagdeo, current CARICOM Chairman and head of the regional economic task force addressing the impact of the global economic crisis on the 15-member community, maintains that the model of economic development the region has been pursuing is not sustainable given its peculiarities.
The impact of the global crisis and climate change were the two major issues before Commonwealth leaders at their 20th summit here, the President told reporters late Saturday.
He said the huge debt overhang and massive sums spent to service debt have affected the community’s capacity to intervene in the crisis which has had a major impact on its members.
He noted that the two largest industries in the region – tourism and the financial sector – have been affected and capacity and fiscal space to do anti-cyclical spending has been limited because of the debt overhang.
“There is no way we are going to build a viable medium term economic strategy without a change in the model”, Jagdeo insisted.
He said that CARICOM heads Saturday advocated a deferential approach to a global economic system.
Most of the large countries were speaking about their efforts to support demand at the global level through the G20 and that’s vital for the future and for those countries to pursue free trade as a way of expanding global GDP, he acknowledged.
“But for countries like ours, many of those things would have sometimes a negative impact – the impact of reciprocity and removal of preferences which have led to the destruction of two major industries in the Caribbean – sugar and bananas.”
He said CARICOM has argued that the model that would be viable for the Caribbean would be one that sees debt relief for middle income countries; special and deferential treatment in the global trading system; dedicated instruments from the multilateral financial institutions (MFIs) to target the special vulnerabilities of the region – like a contingent line of credit to deal with hurricanes and other natural disasters which have a systemic impact on their societies.
The new economic model and climate change were the two big issues for the region, he said, adding, “It was important that we advocated for both and that we seek the support of this broad range of countries across the world because this support would be vital when we get to the WTO (World Trade Organisation) or when we take specific measures to address these issues at the boards of the multilateral financial institutions.”
Jagdeo said the President of the World Bank, the Deputy Managing Director of the International Monetary Fund (IMF), the President of the Inter-American Development Bank (IDB) and the UN Secretary will be at the CARICOM intersessional meeting in Dominica in March.
“I hope that with their support plus the political support, particularly from the countries in the G20, we may be able to get some progress in this regard”, he said.
The President chaired a meeting Saturday between CARICOM and British Prime Minister Gordon Brown and said he dealt with the impact of the global financial crisis on the Caribbean.
“We asked for support of this model that we intend to pursue”, he announced.
He noted that two current British initiatives are counter to the region’s efforts to develop its crucial financial sector and tourism sectors.
The Air Passenger Duty (APD) implemented by the United Kingdom has had a discriminatory impact on the Caribbean by making it far more expensive for British tourists to visit the Caribbean while it is cheaper for them to go to Hawaii or Vancouver which are almost twice as far from London as Barbados.
Jagdeo said CARICOM asked Brown for a rebranding of the Caribbean and he advised that the community work with the British Chancellor of the Exchequer on this matter.
CARICOM states have also encountered difficulties in many parts of the world on signing the tax information exchange agreement to get off the `grey list’ and urged Brown to help get these countries to move swiftly to resolve those issues, he said.
Some CARICOM members are facing an adverse impact because of being `grey listed’ and some financial institutions have already moved from those jurisdictions.
He stressed that the continuing global crisis is not splitting CARICOM although several member states are in difficulties because of reductions in tourism flows, revenue from the financial sector and remittances from developed countries.
“These are real problems and while we have to deal with the long term structural issues – debt and its future servicing, the structure of our economies -- we also have an immediate problem of finding enough cash resources to meet the day-to-day needs of the countries.”
“We have to find a source of bilateral funding. Given what’s happening in the world and the difficulties facing many countries, the only access available is through the multilateral financial institutions and many countries did not have any recourse but to turn to these institutions”, he said.
“We have decided to act in concert and I think there’s a greater sense of urgency”, the President added.
He said CARICOM leaders at one time were too complacent and felt that the current crisis was inevitable – whether there was a global recession or not -- because some were accumulating unsustainable levels of debt and using a larger share of the recurring budget to service that debt.
Total factor productivity in the economies was also declining for several years, he said, adding that this was unsustainable in itself.
November 30, 2009