From Trinidad & Tobago Guardian

IMF Deputy Managing Director Tao Zhang yesterday warned that low oil prices have major implications for the Caribbean.

In the opening address at the Caribbean Forum, jointly hosted by the IMF and the T&T Government at the Hyatt Regency in Port-of-Spain, he noted that commodity exporting countries like T&T and Suriname had already been hit hard. However, he assured that the IMF is “deeply committed to helping Caribbean countries navigate these challenges.”

Zhang said the lower oil prices have benefited many of the region’s oil importers and Jamaica had eliminated much of its double-digit current account deficit in just three years, while Guyana is experiencing its first external current account surplus in decades.

Prime Minister Dr Keith Rowley, commenting on the situation facing the region, said: “The Caribbean will not be able to achieve faster economic growth and sustainable development unless the problem of debt overhang is addressed in a comprehensive way.”

The issue was further explored during the first panel discussion at the forum where the focus was on growth, competitiveness and oil prices. Participants discussed how to respond to a global outlook framed by low but stable commodity prices, which affects commodity importers and exporters differently, and a subdued recovery in advanced economies that remains a drag on the Caribbean tourism sector.

On the plus side, low interest rates in advanced economies could help countries in the region to reduce their cost of financing. Jamaica, Grenada, and St. Kitts and Nevis have achieved important results reducing their fiscal and external vulnerabilities over the last few years. Regional challenges include significant exposure to climate change and natural disasters, as evident from Hurricane Matthew most recently, and the need to improve financial soundness and ensure the resilience of domestic financial systems.

On the issue of loss of correspondent banking relationships, an urgent issue for the Caribbean, it was noted that effective implementation of Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) remains a challenge in many countries, despite progress in adopting some international standards.

Participants noted that technology can help reduce compliance costs,one of the key factors contributing to loss of correspondent banking relationships, especially in smaller jurisdictions. Banks have already invested significant resources into better technology to increase transparency, lower costs, and promote information sharing, while addressing AML/CFT concerns.

“We believe a solution to this issue requires dialogue between countries, regulators and banks, and increased information exchange,” Zhang said in his opening remarks. “This can help clarify regulatory expectations, build trust, facilitate capacity building, and highlight best practices.”

IMAGE: IMF Deputy Managing Director Tao Zhang

For more on this story go to: http://www.guardian.co.tt/business/2016-11-03/imf-official-caribbean-forum-losses-and-gains-low-oil-prices