The International Monetary Fund (IMF) has recommended to Caribbean countries that they reduce their debt and develop new sources of growth to enhance their economic prospects.
The organisation told participants at a regional conference in Barbados the global crisis has had a big impact on economies in the Caribbean because of their strong links to the United States and Europe, adding that their recovery has been sluggish so far.
“While governments responded appropriately to the drop in tourism, trade, remittances and capital flows, they now face economic and social challenges that call for fresh ideas and a renewed policy resolve if the region is to reach a brighter, more sustainable growth path,” the IMF said.
The conference – entitled "Caribbean Policy Challenges after the Global Crisis" and organised by the University of the West Indies (UWI), the Central Bank of Barbados, and the International Monetary Fund (IMF) – brought together experts from across the Caribbean, Canada, the Seychelles, the United Kingdom, and the United States.
The IMF said one of the most difficult issues facing the region is the high level of public debt, and its implications for fiscal sustainability and growth, noting that five of the world’s 13 most indebted nations (as a share of Gross Domestic Product – GDP) are now in the Caribbean.
The IMF said debt has accumulated because of successive years of fiscal deficits and, since the mid 1990s, borrowing by public enterprises and off-balance sheet spending, including financial sector bailouts.
“With mounting interest bills, the global financial crisis caused serious problems for debt management,” it said, pointing out that fiscal consolidation is “critical” to ensuring macroeconomic stability, and also to “crowd in” the private sector.
The IMF said the conference looked at the case studies of the Dominican Republic and the Seychelles, where the impact of the crisis was severe, but where governments had responded proactively, relaxing considerably monetary policy in the Dominican Republic, and pushing through fiscal adjustment and debt restructuring, as well as exchange rate adjustment in the Seychelles.
These efforts, supported by the IMF’s assistance, had helped “restore stability, improve confidence, and spur the recovery,” the IMF said.
(CMC report)
The organisation told participants at a regional conference in Barbados the global crisis has had a big impact on economies in the Caribbean because of their strong links to the United States and Europe, adding that their recovery has been sluggish so far.
“While governments responded appropriately to the drop in tourism, trade, remittances and capital flows, they now face economic and social challenges that call for fresh ideas and a renewed policy resolve if the region is to reach a brighter, more sustainable growth path,” the IMF said.
The conference – entitled "Caribbean Policy Challenges after the Global Crisis" and organised by the University of the West Indies (UWI), the Central Bank of Barbados, and the International Monetary Fund (IMF) – brought together experts from across the Caribbean, Canada, the Seychelles, the United Kingdom, and the United States.
The IMF said one of the most difficult issues facing the region is the high level of public debt, and its implications for fiscal sustainability and growth, noting that five of the world’s 13 most indebted nations (as a share of Gross Domestic Product – GDP) are now in the Caribbean.
The IMF said debt has accumulated because of successive years of fiscal deficits and, since the mid 1990s, borrowing by public enterprises and off-balance sheet spending, including financial sector bailouts.
“With mounting interest bills, the global financial crisis caused serious problems for debt management,” it said, pointing out that fiscal consolidation is “critical” to ensuring macroeconomic stability, and also to “crowd in” the private sector.
The IMF said the conference looked at the case studies of the Dominican Republic and the Seychelles, where the impact of the crisis was severe, but where governments had responded proactively, relaxing considerably monetary policy in the Dominican Republic, and pushing through fiscal adjustment and debt restructuring, as well as exchange rate adjustment in the Seychelles.
These efforts, supported by the IMF’s assistance, had helped “restore stability, improve confidence, and spur the recovery,” the IMF said.
(CMC report)
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