A suggestion to the Caribbean Development Bank

Wednesday, December 20, 2017

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The Caribbean Development Bank (CDB) just announced a grand financing envelope of US$172 million for Jamaica from 2017 to 2021. This follows the 2014-2016 strategy that provided US$38.5 million.

The message from this announcement is very clear: When Jamaica was facing tough challenges from 2013 to 2016, the CDB, we have been made aware, drastically reduced its support. However, now that Jamaica is getting back on its feet the bank has increased its support by over 400 per cent.

To be fair, the CDB was not alone in delaying support for Jamaica. People who keep a close eye on these developments will recall that the International Monetary Fund (IMF) did not finance its own programme during the first two vital years and even pulled funds from Jamaica. Additionally, the World Bank never lived up to its disbursement commitment.

This, we believe, is an important history lesson. The norm is for multilateral development partners to provide countercyclical support. Therefore, when a country is in trouble they are supposed to step forward. That did not happen in Jamaica's case. Indeed, the only bridge available to Jamaica came from Venezuela and China. Additionally, we had a stroke of good luck as the IMF programme would not have worked if oil prices had not plummeted.

The CDB needs to realise that times have changed. We needed its support when times were hard, not when we are already clawing our way out of trouble.

As it now stands, Jamaica requires no funding under the current IMF programme. Our stabilisation programme is about reducing debt, so there will be little celebration over the CDB's announcement about more money to lend. If necessary, we can now borrow from international capital markets at investment-grade terms that are close to those offered by the CDB, without the policy interference that comes with the loans offered by the regional bank.

In addition, the bilateral financing that kept us afloat during the hard years is less expensive than the CDB funds.

We suggest that the CDB reconsiders its strategy, especially given the fact that the Caribbean is one of the most vulnerable regions in the world. Unless the CDB is willing to step forward during the inevitable crises it will lose relevance, opening the door to game-changers who will gladly step into the breach.

As Jamaica creates more fiscal space for development projects it will rely on lenders on whom it can count. The CDB should carefully consider whether it really wants to be on that list, failing which its new lending envelope will most likely remain in Barbados, unused by Jamaica.




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