Caribbean countries urged to make full use of new United States initiative

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Caribbean countries urged to make full use of new United States initiative

Friday, July 03, 2020

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GEORGETOWN, Guyana (CMC)— Caribbean Community (Caricom) countries have been urged to respond “positively” to a United States initiative that would allow regional countries to access funding from a number of international financial institutions as they recover from the impact of the coronavirus (COVID-19) pandemic.

Barbados Prime Minister, Mia Mottley, the outgoing Caricom chair, told the 20thspecial virtual meeting of Caricom leaders on Friday that she had received correspondence late Thursday in her capacity as Caricom chair from Washington on the issue.

She said that the letter, signed by the US Secretary of State, Mike Pompeo, and the Secretary of Treasury, Steven Terner Mnuchin, provides for the “first time… a significant and bold initiative and opportunity to be able to work together with our partners within the hemisphere to see how best we can blunt the instruments or blunt the consequences of COVID-19 as we go forward.”

She said in the letter, it was made “absolutely clear” that Washington had committed itself and had developed a multifaceted framework that it believes will help the region address the immediate humanitarian needs as well as the long term recovery.

“Indeed, in the letter, it goes on to state specifically, first if requested, the United States would support temporary access to the International Bank for Reconstruction and Development just for COVID-19-related assistance for the Bahamas and Barbados, the two Caribbean graduates from the International Bank for Reconstruction and Development.

“Let me say that we have been making and arguing this case for over two years and we have made it more recently again in all of our correspondence to the heads of the international financial institutions and to the heads of governments across the entire global community in the Americas, in Europe, in Asia”.

Mottley said the region had been saying that at the very least, those countries in the Caribbean that have been graduated from access to concessional funding from the World Bank, ought to be given access now, largely because the needs in a pandemic or the needs coming out of a hurricane “require that they have access to concessional funding that will allow us to meet the most urgent demands of survival first, and then thereafter, to begin the journey of transformation”.

She said Washington has in its correspondence “made it very clear that for this period of time that both countries, Barbados and the Bahamas, should be able to access concessional funds from the World Bank, going forward.

“Similarly, they have also added that we will not object on the basis of income classification to borrowing by members of the Inter-American Development Bank to assist with economic or health recovery efforts,” Mottley said, adding “this is also substantive for us and this is what we were asking for”.

She said the letter continued “we have engaged with the World Bank staff to impress upon them that economic reform programmes that can be supported by the international financial institutions, should receive necessary and appropriate financing consistent with the World Bank commitments on support to small states under the recent capital increase package.

“We urge you as chair of Caricom to encourage those countries to engage constructively with the international financial institutions, including the IMF on the type of strong reforms to public finance and governance that you are implementing in your own country,” Mottley quoted the US officials as saying in the letter.

She said that Washington also indicated that “to address immediate liquidity needs, the United States has leveraged its leadership at the IMF to support a total of US$1.7 billion in new emergency funding for Caribbean countries –Bahamas, Barbados, Dominica, the Dominican Republic, Grenada, Haiti, Jamaica, St Lucia and St Vincent and the Grenadines have benefitted from emergency IMF funding to address humanitarian and economic ramifications of COVID-19 pandemic”.

The letter noted that from the poorest countries in the region, Washington has advanced the G20 and the Paris Club debt service suspension initiative with five Caricom countries – St Lucia, Dominica, Grenada, St Vincent and the Grenadines and Haiti-all eligible to benefit from the initiative.

“For countries in the region not eligible for the debt service suspension initiative, but which face severe debt service constraints, the United States will support swift debt rescheduling through the Paris Club. We encourage potential recipients to develop an economic reform programme that can be supported by the IMF and to work with the non-Paris Club bilateral creditors and private sector creditors to provide appropriate and comparable treatment,” Mottley quoted the letter as saying, adding that Washington had also sought to encourage Caricom member states to “be aware that they can keep in touch with the department of Treasury's technical Assistant Office that is already standing by to give assistance in areas ranging from economic reform, tax administration, public financial management, capital market development andinfrastructure”.

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