Antigua Breaking News

Top Trusted News Source in Antigua

Search
SUBSCRIBE
Previous slide
Next slide

Prepare for a long haul: The storm is not fully formed

Editor

Share this article:

Facebook
Twitter
Pinterest
LinkedIn

By Sir Ronald Sanders

COVID-19 is destroying the prosperity that several Caribbean countries anticipated at the beginning of 2020.

The growth projections by the Economic Commission for Latin America and the Caribbean (ECLAC) for Antigua and Barbuda of 6.5%; Dominica 4.9%, Dominican Republic, 4.7%; Grenada 4%; and St Kitts-Nevis 3.5%, evaporated overnight as COVID-19 walloped the economies of these countries.   By the end of March 2020, it was clear that all these economies would shrink significantly by the end of the first quarter of the year, and that the second and third quarters would be no better.

Guyana’s economy was on track to grow by a phenomenal 85.6% largely because of production and sales of newly discovered oil and gas resources. That growth is also unlikely to happen now as oil prices plummet amid reduced demands in a world that was largely shut down for weeks in March and April in attempts to curb COVID-19’s spread. The political situation in Guyana, where results of a March 2 general elections are still not final and verified as credible, and the contraction of the economy by the effects of COVID-19, make the huge projected growth very unlikely.

The Bahamas was already forecast to have negative growth of 0.6%, and Barbados, climbing out of a period of prolonged economic decline, was projected to grow by 1.3%.  The blows delivered to these economies, from the sudden and complete closure of the tourism industry, have further set back their prospects.

A meeting of Heads of Government of the Caribbean Community (CARICOM) on April 16, rightly looked to the International Financial Institutions (IFIs), particularly the International Monetary Fund (IMF) and the World Bank Group (WBG) to access “assistance to meet the financial challenges arising from the crisis”.

Be part of the conversation.

Let us know what you think by adding a comment below. Click here to start now!

In the harsh reality of significantly reduced revenues and increased emergency costs to prevent and contain the coronavirus, many of these countries will find it extremely difficult to pay pensions and wages of their public service establishments.  They all need both an injection of money to help them meet budgetary costs over the next nine months at least, and a suspension of debt service payments to other governments and private lenders from whom they have borrowed.

But it is clear that the countries that control the levers of the global economy, including the decision-making bodies of the IMF, the WBG, and the Paris Club, have no intention of allowing suspension of debt owed by middle-income and high-income Caribbean countries, even though, the criteria is a false measurement of development and financial capability.

G20 Finance Ministers – the representatives of the world’s richest nations – meeting on April 15, issued a communiqué that was long on words, but short on commitment to deliver on the needs of any but low-income countries.  It is almost as if countries are being punished for better policies and economic performance.

The COVID-19 pandemic has once again highlighted not only inequality between nations but, more importantly, the damaging consequences of an unjust economic order.  While rich nations will suffer unemployment and economic decline, they have all the resources to recover from these circumstances.  Developing countries – particularly small developing states – don’t.

Globally, there is now the prospect of a serious debt crisis, and the Caribbean is engulfed in it.  If the problem is not addressed, there will be more than $100 billion in capital outflows from developing economies.  That figure, calculated by reputable organisations, is nearly five times the level from 2008 when a global recession was started by the failures of major US banks.

At the end of the disastrous effects of the pandemic – whatever unpredictable shape that takes – small developing countries, for the most part, will be left poorer, highly-indebted and with little fiscal space, after debt servicing, to return to their growth projections in January 2020.  COVID-19 has created a storm much worse than any brutal hurricane that the Caribbean has ever suffered.

The G20 leaders said that they will do “whatever it takes” to stop companies and households in their countries from taking a heavy loss of income.   But despite declaring that “global action, solidarity and international cooperation are more than ever necessary”, they have given no such undertaking to the countries outside their own nations, except to low-income countries, which, in the Caribbean is Haiti.

The United Nations Conference on Trade and Development (UNCTAD) on March 30, called for a $2.5 trillion coronavirus package for developing countries.   UNCTAD argued that this figure matches the sum of 0.7% of their Gross Domestic Product that developed countries had pledged to deliver over the last ten years but didn’t.  Only five of them – all in Europe – fulfilled their undertaking.

UNCTAD detailed the use of the funds in three ways: a $1 trillion liquidity injection – a kind of helicopter money drop for those being left behind; a debt jubilee for distressed economies, including an immediate debt standstill on sovereign debt payments; and a Marshall Plan for health recovery, largely in the form of grants.

While every developing country should agitate for acceptance of the UNCTAD proposal, it would meet strong resistance from the most powerful nations.   Already, the IMF’s board of directors was restrained by the countries with largest voting rights from lending to Venezuela and Iran.   Further, the defunding of the World Health Organization (WHO) by the United States because of its perception that China influenced the organization over the pandemic, indicate political considerations and not humanitarian or even financial ones.

What the response to the COVID-19 pandemic has demonstrated again is that the prevailing policies of the IMF and WBG are unhelpful to the majority of nations of the world, including the Caribbean, that are classified as middle or high income, disregarding the many other factors of their underdevelopment and vulnerabilities.  For instance, the IMF/Bank proposals did not address rescheduling or forgiveness of multilateral debt or debt owed to private banks.

Caribbean countries will get loans from the IMF and WBG after going through many hoops, but the process will not be swift, and the conditions will be rough.  In these circumstances, Caribbean governments, the private sector, political parties, and trade unions need to collaborate on the actions they can jointly take to weather the gathering storm that has not yet fully formed.   They also must prepare for a long haul.

Share this article:

Facebook
Twitter
Pinterest
LinkedIn

Join the Conversation!

Comments are closed.

In Other News

REQUEST FOR EXPRESSIONS OF INTEREST

(CONSULTING SERVICES – INDIVIDUAL SELECTION)

 

OECS MSME Guarantee Facility Project

Loan No.: IDA-62670, IDA-62660, IDA-62640, IBRD-88830, IDA-62650

Assignment Title: Senior Operating Officer (SOO)

Reference No. KN-ECPCGC-207852-CS-INDV

 

The Governments of Antigua and Barbuda, Commonwealth of Dominica, Grenada, St. Lucia and St. Vincent and the Grenadines have received financing in the amount of US$10 million equivalent from the World Bank towards the cost of establishing a partial credit guarantee scheme, and they intend to apply part of the proceeds to payments for goods, and consulting services to be procured under this project. 

The consultant will serve as the “Senior Operating Officer (SOO)” for the ECPCGC and should possess extensive knowledge of MSME lending with some direct experience lending to Micro, small and medium-sized businesses, knowledge of the internal control processes necessary for a lending operation and the ability to design and implement risk mitigation procedures. The ideal candidate should possess an Undergraduate Degree from a reputable college or university, preferably in Business, Accounting, Banking or related field, with a minimum of 5 years’ experience in lending, inclusive of MSME lending. The initial employment period will be for two years on a contractual basis. Renewal of the contract will be subject to a performance evaluation at the end of the contractual period. The assignment is expected to begin on September 30th, 2021.  The consultant will report directly to the Chief Executive Officer of the ECPCGC.

The detailed Terms of Reference (TOR) for the assignment can be viewed by following the attached link below. 

 

https://bit.ly/3iVannm

 

The Eastern Caribbean Partial Credit Guarantee Corporation (ECPCGC) now invites eligible “Consultants” to indicate their interest in providing the Services. Interested Consultants should provide information demonstrating that they have:

  • An Undergraduate Degree from a reputable college or university, preferably in Business, Finance, Banking or related field; and
  • Minimum of 5 years’ experience in MSME lending. Applicants should also have:
  • The ability to design and implement risk management procedures 
  • Extensive knowledge of MSME lending with some direct experience lending to small and medium-sized businesses
  • Extensive knowledge of MSME banking operations
  • Knowledge of the internal controls necessary for a lending operation and the ability to design and implement risk management procedures
  • Experience developing and presenting information in public, including responding to questions in real-time
  • Experience lending to MSMEs located in the ECCU
  • Knowledge of marketing and communicating with the MSME sector
  • Ability to draft procedures to be used in a lending operation
  • Familiarity with the mechanics of a loan guarantee program
  • Exceptional written, oral, interpersonal, and presentation skills, and
  • Proficiency in the use of Microsoft Office suite.

The attention of interested Individual Consultants is drawn to Section III, Paragraphs 3.14, 3.16, and 3.17 of the World Bank’s Procurement Regulations for IPF Borrowers July 2016, [revised November 2017] (“Procurement Regulations”), setting forth the World Bank’s policy on conflict of interest. A Consultant will be selected in accordance with the Approved Selection Method for Individual Consultants set out in the clause 7.34 of the World Bank Procurement Regulations for IPF Borrowers. 

 

Further information can be obtained at the address below during office hours 0800 to 1700 hours:

Eastern Caribbean Partial Credit Guarantee Corporation

Brid Rock, Basseterre,

St. Kitts.

Expressions of interest must be delivered in a written form by e-mail by August 11th, 2021, to [email protected]. 

 

For further information, please contact:

Carmen Gomez-Trigg                                                            Bernard Thomas

Chief Executive Officer                                                          Chief Financial Officer

Tel: 868-620-8144                                                                  Tel: 869-765-2385

Email: [email protected]                                          [email protected]