From Caribbean360

BRIDGETOWN, Barbados, CMC – The Barbados-based Caribbean Development Bank (CDB) says it is still concern that Caribbean economies are still lagging behind other small island developing states underscoring the need for urgent critical structural reforms if the region is achieve sustainable growth.

“Small size is no excuse for under performance,” said Dr. Justin Ram, the CDB’s Director of Economics while reporting on the performance of the Bank’s borrowing member countries (BMCs) on Tuesday.

Ram noted that in 2013 the region’s service based economies suffered significant declines resulting from a fall off in tourist arrivals.

He said these declines revealed certain structural deficiencies which have translated into deteriorating fiscal accounts in most of the bank’s high indebted BMCs.

“For example in St. Lucia and Barbados, there was notable accumulation in debt accumulation. This was followed by those in Antigua and Barbuda, Grenada, St. Vincent and the Grenadines and Dominica to some extent.

“Now conversely in some of the other highly indebted countries of the region namely Belize, Jamaica and St. Kitts -Nevis, successful debt restructuring in these countries activated some improvements in their fiscal performance over the course of 2013.

“Good progress was also made by countries involved in International Monetary Fund (IMF) programmes and this is particularly related to Jamaica and St. Kitts-Nevis,” he added.

CDB President, Dr. Warren Smith, blamed the region’s accumulation of debt on what he called “a direct consequence of the region’s inability to compete internationally” adding that regional countries were caught up in a “foreign exchange bind” and that they must now adjust to pay their way in the world.

“Our economies are not generating enough foreign exchange to be able to sustain our standard of living so what we end up doing is rather than adjusting to a lower standard of living what we do is that we borrow more in order to sustain our standard of living.

“I think that what we are seeing now is that our countries have reached a situation where they cannot continue to sustain that standard of living by borrowing. We need to adjust now, “Smith said, stressing that countries must first fix their fiscal and debt situation.

“It is almost a situation of you need to change the wheels while the bus is moving so that even as you adjust the fiscal and debt situation you need to be also putting in place those things which will allow you to change the structure of your economy and be able to be more competitive,” Smith added.

Ram also called on the region to address  pressing structural deficiencies stifling the region’s competitiveness. These include the cost of doing business and high energy costs.

“At the moment if we were to compare what’s happening in Caribbean economies as oppose to what’s happening in Singapore we find for example that it takes six months to acquire construction permits on average in the Caribbean to 26 days in Singapore and with respect to enforcement of contracts within the Caribbean on average it takes 772 days as opposed to 150 days in Singapore.”

“I should also add that for Caribbean economies the average cost of electricity is very high…so for example electricity cost are around 35US cents per kilowatt this is far too high,” Ram said.

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