Caribbean states need help, urgently, to reduce debt overhang - CDB President

Dr. Warren Smith, President of the Caribbean Development Bank (CDB), is urging the large international financial institutions (IFIs) to work creatively with the small, vulnerable countries of the Caribbean in order that they might significantly reduce their huge debt overhang as quickly as possible.

Failure to achieve that sharp reduction, Dr. Smith, believes, “is likely to heighten the risk of premature abandonment of the adjustment programme.”

Dr. Smith, speaking at the IMF Caribbean High Level 2 Forum in Montego Bay on Thursday, said the “slow burn approach to whittling down large debt overhangs is fraught with danger, and cries out for an urgent solution.”

In that regard, he pointed to the work of the CDB with some Eastern Caribbean states, such as St. Kitts & Nevis, and Grenada to reduce their debt overhang, “under the cover of homegworn IMF supported adjustment programmes.”  

He contends that even greater success could be achieved in this regard, if the larger and more cash rich international financial institutions were to develop similarly creative programmes for the larger Caribbean countries, “with sizeable debt overhangs and somewhat different circumstances.”

Support

Dr. Smith also highlighted the need to win over and keep the support of the people of these countries during the adjustment period. To achieve that, he’s recommending the pursuit of  a set of initiatives that can be regarded as “quick wins”. 

That was particularly important for the youth demographic, he said, with available data suggesting that youth unemployment, “at levels north of 35% in many of our countries, needs immediate attention.”

He highlighted a recent initiative by the World Bank, targeting young people in the field of animation, as one prime example of “the possibilities for unleashing the dynamism of our young people in a sector where they can build small businesses; earn foreign exchange; and integrate themselves meaningfully into the international value chain.”

But he’s cautioning against making this a one-off venture, arguing that it must be” the target of sustained focus and financial resources.’

 Similarly, he said “opportunities must be provided for our youth to express their creativity in other fields deploying ICTs.”

Turning to the role of the Region’s private sector, Dr. Smith is urging business leaders to take advantage of “the improving business environment and stimulating growth through investment.”