The Caribbean Development Bank (CDB) at its annual press conference indicated that the region’s gross financing needs exceed 10 billion USD. Growth recommendations emphasize resilience across member states.
by Marco Lopez
BELMOPAN, Thurs. Jan. 19, 2023
Improved economic growth across the region was seen in the year 2022, as some semblance of normalcy returned after two years of the Covid-19 pandemic, the representative from the Caribbean Development Bank (CDB) reported yesterday, during its annual press conference. Regional economic growth of 10.3% was recorded in 2022. The CDB projects that this pattern of growth will continue into this year and estimates that it will drive a 5.7% regional growth rate in 2023. Support, however, is still needed for the most vulnerable member states among us; of note, the political instability in Haiti has caused significant food and commodity shortages in that member state.
The bank has outlined seven major recommendations to address the need for increased resilience across the region. These include access to finance, regional cooperation and integration, regional connectivity and transportation solutions, food sovereignty, climate action, energy security, and private sector engagement. While the bank’s estimate of gross finance needs in 2020 was close to 10 billion dollars, its president, Dr. Hyginus “Gene” Leon, says the resource need is much larger.
“The onset of Covid amplified structural weaknesses in our economies and highlighted the extent of our financing need. We estimate that the region faces close to US 10 billion dollars in gross financing need in 2020, which is a measure of a country’s overall fiscal position, plus any funds needed to repay existing debt; moreover, the expenditures need to address the vulnerabilities exposed by the pandemic, and the resources required to achieve the sustainable development goals suggest that the resource need of the region is much, much larger than the 10 billion I spoke of, “ Dr. Leon pointed out.
He shared that the mobilization of finance flows has become more critical for the region, given the expectation that gross financing needs will remain elevated. He added that the bank has provided on average of 300 million dollars to member states over the last 3 years to address the need for increased finance flows. Dr. Leon, states, however that more action is needed
To meet the region’s financing needs and address fiscal pressures, the bank has determined that four actions are necessary: a broadening of regional financial systems, strengthening of public finance management and expenditure transparency, prioritizing macro-fiscal stability to access increased financial resources, and finally supporting the rechanneling of at least 2% of advanced economies’ excess Special Drawing Rights to enable the transformation of Caribbean economies.
How the region meets its food and nutrition needs is one of the other major shortfalls the CDB is looking to address. World Bank data estimates that the cost of a healthy diet is highest in Latin America and the Caribbean. At this time, the Caribbean currently imports more than 80% of the food that is consumed.
“Food sovereignty must be a key collective objective,” Dr. Leon says. Major challenges facing the region include low productivity, inconsistent outputs, and high vulnerability within the region. This results in low competitiveness of member states, limited ability to respond to market demands, and heavy dependency on imports for food.
“Therefore, to address this we recommend investing in air and marine transport infrastructure and services to facilitate improved intraregional trade and integration into global food markets, two—designing and supporting the implementation of internationally recognized food safety standards to strengthen market linkages, and three—increasing investment in appropriate and location-specific and climate-smart agriculture processes and promoting agricultural insurance to reduce the risk posed by climate change and natural hazard events,” Dr. Leon outlined.
The region’s private sector will play a direct role in achieving these key objectives set out by the CDB. Leon suggested that the region’s private sector must transition from being mere bystanders in the development process to becoming partners instead.
“This transition requires a change in mindset, to reimagine traditional public-private partnerships to partnerships for prosperity and profits,” he noted. To achieve this, an enabling environment must be created among member states and there must be investment in innovation so that there are viable investment opportunities. “We accept the expectation of private-sector-led growth, but now we need to move beyond private-sector-led growth to private-sector-led development,” Dr. Leon said.
Leon is of the opinion that the best way to predict the future, “is to create it.” He further remarked, “The CDB stands ready to accelerate collaboration between the BMC and other stakeholders in a partnership to propel the region forward. We have no choice – time is running out.”