CDB says high debt hurting Caricom economies

CDB says high debt hurting Caricom economies

BY RICKEY SINGH Observer Caribbean correspondent

Saturday, February 09, 2013

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BRIDGETOWN, Barbados — President of the Caribbean Development Bank (CDB), Dr Warren Smith, yesterday warned member countries of the regional institution to avoid facing their own "fiscal cliff" by moving vigorously to reduce their mounting debt stock.

At least seven borrowing countries currently confront this economic challenge. They include the Caribbean Community's (Caricom) sole energy-based economy, Trinidad and Tobago; Barbados, which formerly boasted a record in robust economic management; and current crisis-ridden economies — Jamaica, Grenada, St Kitts and Nevis, and Grenada.

In his more than two-hour-long press conference, supported with printed statements and graphs, Smith discussed and answered questions varyingly related to the CDB's role as more than a provider of financial aid to Borrowing Member Countries (BMCs), as well as how it interacts with international financial institutions and donors involved as partners in the region's economic and social development.

In reviewing the CDB's activities for 2012 and providing the economic background and prospects for 2013, Smith disclosed that the debt levels of the seven BMCs — Jamaica and St Kitts and Nevis, Antigua and Barbuda, Barbados, Belize, Dominica and St Lucia — have become unsustainable. Jamaica and St Kitts were listed as the two highest.

According to the CDB, the fiscal policy agenda of the seven economies identified with unsustainable debt levels must include measures that tackle improvements in tax yields by reassessing the range of exemptions and concessions offered; improve compliance and collection of arrears; and improve expenditure management systems that increase the focus of progammes with high development impact and cost minimisation.

In the meantime, the CDB pointed out that high unemployment has remained a major factor in the region. Available data provided for 2012 showed that St Lucia had a 21.2 per cent unemployment rate; The Bahamas 14.7 per cent; Jamaica 14 per cent; and Barbados 12.2 per cent. In contrast, Trinidad and Tobago showed a mid-year unemployment of merely four per cent, compared with a 5.8 per cent rate at the end of the first quarter of 2011.

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