Phillips urges 'vigorous review' of policies governing concessionary aid

Wednesday, July 15, 2015

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ADDIS ABABA, Ethiopia (CMC) - Jamaica yesterday joined developing countries in urging the international community to "vigorously review" the measures used for providing concessionary aid, recalling also the impact the 2008 global economic crisis had on small island developing states (SIDS).

Finance Minister Dr Peter Phillips, addressing the United Nations Third International Conference on Financing for Development here, said that the conference, which ends on Thursday, highlights the fact that sustainable development today requires a partnership of all states and people.

Phillips told the conference that one of the realities of globalisation is that it has affected all countries to some degree and that the 2008 economic meltdown "had an impact on all of us.

"Countries like Jamaica...heavily dependent on trade and with an economy heavily burdened by the demands of a limited resource base and closely tied to the fortunes of large economies... are severely dislocated and are still today feeling the effects of the global recession."

Phillips said that many Caribbean Community (CARICOM) countries and SIDS are in a similar predicament, adding "it can readily be appreciated therefore that the global recession could have retarded efforts to achieve millennium development goals".

The Jamaica finance minister said that the agreement likely to be reached at the conference here must be visionary in its reach and impact. He said special attention must also be paid to lesser developed countries and SIDS.

Phillips told the meeting that a defining feature of the Caribbean relates to high debt and debt sustainability, and that as a result "half of the Caribbean states are either in negotiations or
have just concluded IMF programmes".

He said these programmes require major efforts at fiscal consolidation and the implementation of structural reforms.

He said according to the Economic Commission for Latin America and the Caribbean (ECLAC), the English-speaking Caribbean countries have debt to gross domestic product (GDP) ratios which exceed 50 per cent.

"In fact, several including my own country, have debt to GDP ratios in excess of a 100 per cent. Apart from the high levels of indebtedness, small sizes, trade dependence and a narrow resource base, Jamaica and other Caribbean countries face extreme climate-related vulnerabilities."

Phillips said that during the period 1994 to 2014, approximately US$30 billion of the budgets of Caribbean countries had to be used for reconstruction as a result of damage caused by storms and other natural disasters.

"Added to this, the Caribbean region has been the most severely impacted by the global economic crisis and the effects have been most prolonged. The consequence of all this is that the Caribbean is one of the most highly indebted sub-regions of the world, and Caribbean states are at risk of being overwhelmed by any unanticipated negative events occurring in the wider global economy."

But Phillips said that because of its middle-income status, debt relief given to other highly indebted poor countries cannot be accessed by the Caribbean.

He told the conference that many of the Caribbean countries will never achieve faster growth and meet sustainable development goals if the issue of debt overhang is not addressed.

"The fact is, in the absence of some programme of international support, the small, vulnerable, relatively undiversified economic structure of Caribbean states is likely to be overwhelmed by the risk inherent... in other economies still suffering from the effects of 2008 and beyond.

"We therefore urge this meeting to pay specific attention to the issue of debt and debt sustainability and to recognise the special circumstances faced by the highly indebted and vulnerable small island states of the Caribbean."

He said the region endorses the work being done by some "relevant organisations" in drawing attention to the financial issues and that "we continue to call for a more vigorous review of the criteria for graduation for countries and acceptance of factors that should be taken into account in this regard".

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