Caribbean & Central America - August 2021

*** THE CARIBBEAN TURNS ON ORTEGA. When the Organisation of American States (OAS) passed its resolution on 15 June condemning Nicaragua and President Daniel Ortega for undemocratic conduct, 12 Caribbean countries voted for the resolution, two abstained, and one voted against. St Vincent & the Grenadines was the only Caribbean country to remain loyal to Ortega while Belize and Dominica abstained on the resolution.

Five Caribbean countries which had never previously voted against Nicaragua changed sides for the 15 June resolution. These five were Barbados, Grenada, St Kitts & Nevis, Suriname, and Trinidad & Tobago. Normally these five would remain faithful to their code of non-interference in the internal affairs of member states, but the arrest of, inter alia, five presidential pre-candidates and nine opposition leaders proved too much for them to stomach.

Commenting on the switch, Ronald Sanders, who is Antigua’s ambassador in Washington and the OAS, said that while Caricom countries have mostly been faithful to the mantra of non-interference, “no country can be a member of an organisation that proclaims adherence to the rule of law, democracy, human rights, and free and fair elections and remain silent when these principles are discarded.”

*** US SENATOR WARNS OF CHINA’S VACCINE DIPLOMACY IN THE CARIBBEAN. Albio Sires (D-NJ), who is chairman of the US Senate sub-committee on the Western Hemisphere, told a hearing at the end of June on the administration’s policy to deepen engagement with the Caribbean that the US was allowing China to gain ground with its vaccine diplomacy. He said: “Here’s what I have a problem with. You have China going in and giving directly to these islands the vaccine. They take all the credit. Why can’t we do the same thing and take the credit instead of giving to Covax or Caricom? They may be great organisations, but I’m not looking to build those organisations. I’m looking to build our position in the Caribbean, and our position in the Caribbean should be that we should send the vaccines directly to these people. Let them know that it’s the United States that is helping.”

 *** IMF HIGHLIGHTS IMPORTANCE OF CBI PROGRAMME FOR ST KITTS. On 6 July, the International Monetary Fund (IMF) released a Concluding Statement on the impact of the Covid-19 pandemic on St Kitts & Nevis (SKN) in which it highlighted the importance of the country’s Citizenship by Investment (CBI) programme.

The IMF statement noted: “St Kitts and Nevis entered the Covid-19 pandemic from a position of fiscal strength following nearly a decade of budget surpluses. A significant part of the large CBI revenues were prudently saved, reducing public debt to below the regional debt target of 60 percent of GDP and supporting accumulation of large government deposits.”

Nevertheless, the pandemic has had a severe impact on the SKN economy, with a contraction of 12.5% in 2020 and the government’s first fiscal deficit (4.7% of GDP) since 2010. There is likely to be a further contraction of 1% in 2021, but a 10% bounce back in 2022. GDP should return to its pre-pandemic level in 2024.

The IMF urges the government to resume its policy of saving part of CBI revenues to build fiscal buffers “once the recovery is firmly established”. It says: “Assuming annual CBI revenues of 9 percent of GDP, the savings would allow reducing public debt to around 40 percent of GDP and rebuilding deposits to close to a quarter of GDP by the end of the decade, which would provide a significant buffer against both macro-economic and natural disaster shocks.”