Part 1

In the final session of the IMF’s high-level Caribbean forum on Thursday “Unleashing growth and strengthening resilience”, IMF Managing Director Christine Lagarde took on the role of moderator to ask questions of Jamaica’s Prime Minister Andrew Holness, Grenada’s Prime Minister Keith Mitchell, and the Deputy Prime Minister of the Bahamas, Kevin Peter Turnquest.

Her leading question was “What are the most important reasons for the Caribbean growth stagnation?”

Prime Minister Holness argued that poverty was our biggest problem, as it made it difficult to make consistent long-term disciplined policy choices. In his view, Jamaica had been “indisciplined in our policies”, increasing debt to finance short-term consumption, a “literal catastrophe”.

The solution, he said was better “communication” with the electorate, something that was difficult to achieve.

Grenadian Prime Minister Keith Mitchell told his own story of returning to power in 2013, winning 100 per cent of the seats after the previous government presided over four years of negative growth between 2008 to 2012.

Straight after his victory, to a crowd of roughly half the population, he called on his top two political antagonists to help deal with the huge expectations he saw in the people’s faces. Within his first month in office, he created a social partnership, including even a trade union leader who was historically hostile, which in addition to the unions included the business community and the churches.

Every major decision was communicated with the group, allowing them to implement some tough decisions.

Mitchell personally chaired the monthly meetings of the group, which included respected, independent people with reputations to lose.

And, as he put it, “The churches called us out when we misbehaved.”

One key factor was the attitude of the historically hostile Trade Union leader, who said, “This man won all the seats, and called my name to help. I can’t refuse”. The Prime Minister said he always stressed win-wins in his conversations with the partnership group – “you win, I win, the country wins”.

Together they developed a plan of action, including increases in taxation (not an easy sell), but with the argument ‘if we don’t do it we will all be in trouble’.

Bahamas Deputy Prime Minister Kevin Peter Turnquest observed that ever since the global recession, the Bahamas has had low or negative growth.

He observed that the “stimulus” advice of the IMF to the industrialised economies during the global recession “doesn’t apply to us”, as Bahamas ran “historic deficits”, spending more and getting deeper into debt, and ultimately was able to provide less credit to the private sector.

Instead, Bahamas needed more innovation.

In the case of their financial sector, Turnquest advised that he was encouraging them, rather than being followers “always chasing the ball to catch up on best practices”, to look ahead and become innovators. He argued that Bahamas needed to become a technology hub, the “Silicon Valley” of the Caribbean.

Lagarde’s second question was “why is the Caribbean not together?”.

The Grenadian Prime Minister observed that the Caribbean pooling resources together was fundamental, particularly for small countries such as his own. He cited areas such as public sector reform as having great potential for regional cooperation, as one of the region’s biggest “common” problems was the productivity of the public sector.

Grenada had in fact adopted Fiscal Responsibility Legislation, one of the many areas of common legislation that could be easily adopted in the region in view of our shared history. Partly as a result, Grenada’s debt to GDP ratio had fallen from 108 per cent to 68 per cent and was still going down.

Prime Minister Holness noted that Caricom alone only represented about 6 million people, and that Jamaican businesses needed large markets (Cuba, Haiti, Dominican Republic) to prosper.

He noted that despite such institutions as the University of the West Indies, countries were setting up their own institutions, so that the integration dream needed to take account of island policies.

Bahamas Deputy Prime Minister Turnquest observed that despite the existence of such regional institutions as the Caribbean Hotel and Tourism Association (CHTA), even there the Caribbean was competing rather than cooperating to market the uniqueness of their different Islands.

Turnquest said there was a need to identify areas where they can agree on where the issues are common to all.

He cited the example of the cruise lines, which made billions of profits, while playing one Caribbean island against the other. The region needed an agreed “baseline” expectation when dealing with the cruise ships, because, as he put it “We are the product, they are the transportation, but they treat us as though it is the other way around.”