Caribbean & Central America - August 2017 (ISSN 1741-4458)

*** CONTINUING CHALLENGES FOR TRINIDAD & TOBAGO. In its latest Survey, the United Nations (UN) Economic Commission for Latin America and the Caribbean (Eclac) has projected growth of 0.3% for Trinidad & Tobago in 2017. The International Monetary Fund (IMF), which has just completed an Article IV consultation with Trinidad, is also reporting a slight improvement. It says: “Although preliminary data shows that the economy contracted in the first half of the year on weak energy production and spillovers to the non-energy sector, the economy may be starting to turn a corner as a result of a projected recovery in gas output, though growth may still be flat or somewhat negative for the year as a whole.”

Looking ahead, the IMF says: “The economic improvement that is now beginning is projected to continue into the medium-term, notably given a pipeline of projects that will improve the supply of natural gas to the downstream energy sector.” It went on to note that oil output is growing due to the exploration efforts by state-owned Petrotrin and a refinery upgrade.

With regard to fiscal policy, the IMF “urged the authorities to undertake a medium-term, modestly front-loaded fiscal adjustment to rebalance the public finances and put debt on a sustainable path.”

*** ST KITTS TO BEAT DEBT REDUCTION TARGET. The IMF has said that it expects St Kitts & Nevis (SKN) to reach the debt-to-GDP target ratio of 60% in 2018, which is 12 years ahead of the 2030 target date set for the eight members of the Eastern Caribbean Currency Union (ECCU).

According to the Eastern Caribbean Central Bank (ECCB), the group’s combined debt-to-GDP ratio was 79.3% in 2014, 73.3% in 2015, and 72.5% in 2016. SKN’s debt-to-GDP ratio is currently standing at 63.2%.

*** GUATEMALA MOVES ON BELIZE DISPUTE REFERENDUM. On 2 August, Guatemala’s unicameral national congress ratified an international agreement calling for the electoral authorities to organise a popular consultation on whether the country’s long-standing territorial dispute with Belize should be heard by the International Court of Justice (ICJ). The move by Guatemala’s congress is seen as potentially paving the way for the resolution of a territorial dispute that dates back to 1821, when Guatemala laid claim to close to half of Belize’s national territory. The dispute has been a source of diplomatic tensions between Guatemala, Belize, and the United Kingdom (UK), given that Belize was a British territory until 1981.

In 2008, Guatemala and Belize signed a bilateral agreement under which they pledged to hold referenda in each country to ask if the Guatemalan and Belizean populations agreed to refer the dispute to the ICJ so that the international court could issue a definitive resolution on the dispute, but the agreement had not been ratified by Guatemala’s legislature until now.

The legislatures in both Guatemala and Belize had previously agreed that the proposed referenda should not be held simultaneously as had been stipulated in the 2008 agreement. This point had been pushed by Guatemala amid concerns that tensions could be exacerbated if the two countries ran simultaneous referendum campaigns. The initiative approved by Guatemala’s congress calls for the supreme electoral court (TSE) to organise a popular consultation on whether the territorial dispute with Belize should be taken to the ICJ. Although no date has been set by congress, the speculation in the local press is that this could be held before the end of the year. Meanwhile, Guatemala’s Foreign Minister Carlos Raúl Morales has said that he expects that Belize will be able to hold its referendum next year.