Caribbean & Central America - October 2021
CARIBBEAN POINTERS
*** GUTERRES PROPOSES DEBT PLAN. On 4 October, United Nations (UN) Secretary General António Guterres presented a four-point debt crisis action plan to the 15th session of the UN Conference for Trade and Development (Unctad) held in Barbados. Making his presentation, Guterres described four “glaring challenges” which he named as “debt distress, systems starved of investment, unfair trade, and a climate emergency” and said that if left unaddressed would “make any notion of prosperity for all a distant dream”.
Of these, Guterres listed debt distress as the most pressing, calling it a “dagger through the heart of global recovery”. Ensuring extra liquidity was immediately essential, he argued, and could be provided through “a substantial re-allocation of unused SDRs [International Monetary Fund Special Drawing Rights]”.
After that, Guterres argued, must come “an extension and expansion of the G20’s Debt Service Suspension Initiative into next year”. However, he went on to argue, that may not be enough for many countries which “will need effective debt relief involving both public and private creditors”. He called for “a comprehensive strategy around reforming the international debt architecture – including debt restructuring or reduction, especially for middle-income countries – to help them avoid deadly cycles of debt waves”.
Separately, the UN Economic Commission for Latin America and the Caribbean (Eclac) has proposed the creation of a Caribbean Resilience Fund to alleviate 12% of the region’s total debt in a policy brief entitled “Liquidity and Debt Solutions to Invest in the SDGs [Sustainable Development Goals]: The Time to Act is Now.”
*** TOUGH START FOR NEW BAHAMAS GOVERNMENT. The day after the general election held on 16 September, won by the Progressive Liberal Party (PLP), whose leader Philip Davis became the new prime minister, international credit ratings agency Moody’s downgraded The Bahamas from Ba2 to Ba3 with a negative outlook.
Explaining its move, Moody’s said: “The combination of rising debt burden and a decline in revenue contributed to a further worsening of debt affordability, with the interest-to-revenue ratio increasing to 23% in FY2020/21 compared with 16% in FY2019/20.”
The agency expects the interest-to-revenue ratio to peak in FY2021/22 “but to remain above 20% over the subsequent three years, and significantly higher than rated peers”. The debt burden is expected to remain close to 80% of GDP by the end of FY2022/23, which is “well above the Ba3-rated median of 60%”.
Moody’s is forecasting 8% growth for The Bahamas this year, with 7% next year, which (along with the ending of pandemic-related spending) should allow for “fiscal consolidation”.
*** BELIZE PM UPBEAT ON ECONOMIC RECOVERY. On 21 September, during Independence Day celebrations, Belize’s Prime Minister John Briceño said that agriculture was leading an “economic resurgence”, with nearly 25% growth in the second quarter, and that tourism was “not far behind”, growing by 20% in the second quarter.
The prime minister added: “Overall, our economy is now headed in the right direction, experiencing an overall growth of 22% in the second quarter and over 6% in the first six months of the year – more than triple what our…partners like the IMF expected.”