CDB boss upbeat about Caribbean economies

BRIDGETOWN, Barbados, CMC – President of the Caribbean Development Bank (CDB) Compton Bourne on Thursday expressed confidence that regional countries will overcome the economic challenges that they will face in the year ahead.

“I don’t agree that we are drowning. I think that we are swimming in difficult waters…we have not simply stayed afloat, we’re managing as well as can be expected. I don’t think that the regional economies are in a great danger of not surviving,” Bourne told journalists during a review of the CDB’s activities for the past year.

Most Caribbean countries experienced fall-offs in revenue from tourism, construction, foreign direct investment and remittances. As a consequence, governments have taken various steps to prevent further deterioration of their economies, which the senior economist said is important to how the economies perform in the coming months.

“I think that a lot depends on the extent to which the various stimulus packages they (regional governments) have put in place take hold.

“But even more so…a lot depends on the extent to which there are financial resources to allow governments to restart or maintain their capital investment programmes and at the same time to expand their social safety nets so that the hardships that have been experienced at the personal level in some countries will not become more widespread,” he told the gathering at the Bank’s Wildey headquarters on the outskirts of the Barbados capital.

Bourne said the CDB was anticipating an increased reliance on its resources by Borrowing Member Countries (BMCs) due to the challenges they are likely to face in drumming up the necessary finances needed to fund social and economic programmes.

“We envisage on the basis of detailed, country-by-country projections that the Bank’s BMCs will need to step up investment substantially over the next five years to restore economic growth and prevent the erosion of living standards.

“Given reduced access to international capital markets, they will turn increasingly to their regional bank, CDB, for financial assistance. We have to ensure that the Bank has the financial capacity to respond positively,” he added.

Looking back at the performance of the Bank’s BMCs, Bourne said they struggled in 2009 to maintain economic momentum in the face of three major problems…“…continuing deterioration of the global economy which adversely affected demand and prices of internationally traded goods and services; further erosion of preferential market access for commodity exports; and regional financial difficulties ensuing from the collapse of a major financial conglomerate.”

CDB disbursed close to US$209 million to BMCs last year, with the less developed countries, including Haiti, receiving US$111 million and US$83 million being provided to the more developed countries. The additional US$14 million was disbursed to regional entities.

“Our efforts as a bank to stabilise the public finances of Caribbean countries were a major feature of operations in 2009,” Bourne said.

The main beneficiaries of the Bank’s policy-based loans under an arrangement introduced in 2007 were Antigua and Barbuda, Grenada, and St Vincent and the Grenadines. In all, US$68 million was provided to those countries, with Haiti being given a grant of US$10 million.

“Attached to all of these policy-based loans and grants were programmes for fiscal reforms and strengthening of fiscal capacity,” the CDB president said.

“As would be expected, CDB continued to direct resources towards capital projects and technical assistance projects and activities in the category of social infrastructure such as education and training, business development and water supply, and in economic infrastructure such as roads,” he said.