Caribbean & Central America - October 2022

*** CARBON CREDITS FOR DEBT. On 20 September, International Monetary Fund (IMF) Managing Director Kristalina Georgieva told the New York Times Climate Forward event that carbon credits could be a way of reducing debt for Caribbean nations. She said: “What do we do in a world where crisis upon crisis has lifted debt burdens on developing countries, and at the same time they are being hit by climate shocks? I do believe it is very important to think about finding a solution that marries these two problems.”

Georgieva added: “On one side debt, on the other side climate. We have been advocating for creating objective platforms in which both public institutions, philanthropic and private sector, can step in…Let’s take [the example of The Bahamas], you suck in carbon, why not provide to your creditors not money but carbon credits that have monetary equivalents? Is that possible? Yes, it is possible. It is hard but it is possible.” The IMF managing director went on to say that the Fund has been thinking about “how to create key performance indicators that would allow a country to swap its debt for climate investments and climate resilience or in a mitigation programme”.

One increasingly vocal supporter of innovative solutions is Prime Minister Mia Mottley of Barbados. She used her September speech to the United Nations General Assembly to argue for a complete reform of the global financial architecture. She argued that financing for the development of small island developing states (SIDS), such as Barbados, cannot be achieved with short-term debt and must be replaced by “at least 30-year money”. She pointed to the fact that Britain only paid off the last of its World War I bonds 100 years after they were issued. She said: “We are no different. We have incurred debts for Covid-19, for climate, and now to fight this difficult moment of inflation and [supply crisis]. Why, therefore, must the developing world now seek to find money within seven to 10 years, when others had the benefit of longer tenures to repay money?”

*** EU BLACKLIST BLOW FOR THE BAHAMAS. On 4 October, the European Union (EU) added The Bahamas, Anguilla, and the Turks & Caicos Islands to its list of “non-cooperative” tax havens. The EU said that these three jurisdictions, which all have a zero or nominal corporate tax rate, “are attracting profits without real economic activity”. The EU’s list is updated every six months, and it requires EU member states to take “defensive measures” against those on the list.

*** LOOKING TO AFRICA. From 1-3 September, Barbados played host to the inaugural Africa-Caribbean Trade and Investment Forum (ACTIF2022) aimed at fostering strategic partnerships between the business communities in Africa and the Caribbean. The forum attracted over 1,000 delegates.

Trade between the Caribbean and Africa is still small, at around US$1.5bn. Africa accounts for only 4.4% (US$800m) of the Caribbean’s total exports to the world. Imports from Africa (US$603m) represent just 1.8% of the Caribbean’s total annual imports. In her speech to the forum, Prime Minister Mia Mottley of Barbados said: “It is not anticipated that we can reverse centuries in a few years, but it is anticipated that there are some who must claim the courage to jump off the ship and make it happen.”

Among the concrete announcements accompanying the forum, the African Export-Import Bank (Afreximbank) announced that it would be taking more interns from the Caribbean as part of its plans to build ties, and it would set up a Caribbean Exim Bank subsidiary with an investment of US$700m. Separately, the bank has allocated US$250m to support African-Caribbean trade and investment.

Seven Caribbean countries have agreed to join a partnership with Afreximbank for the purpose of “ushering in investments to concretise the commercial relations between the two regions, with an immediate focus on establishing an air bridge, and business-to-business match-making through the newly established African-Caribbean Business Council”.

The International Trade Centre (ITC) has estimated that Africa could boost its goods exports to the Caribbean by more than 50% within five years, with the Caribbean expanding its goods exports to Africa by around one-third.

*** OIL MONEY FLOWING FOR GUYANA. On 5 September, Guyana’s central bank said that it expects the country to earn more than US$1bn this year from its share of offshore oil exports, expected to reach 13m barrels of oil. Finance Minister Ashni Singh has forecast GDP growth of 56% for this year.

*** DUTCH PM VISITS SURINAME. On 12 September Prime Minister of the Netherlands Mark Rutte began a two-day official visit to Suriname. It was the first visit to the Dutch-speaking country by a Dutch head of government since 2008 and signals the return to international respectability of Suriname since President Chandrikapersad Santokhi replaced convicted drug-trafficker Desi Bouterse as president in July 2020.

*** QUEEN’S DEATH ACCELERATES CARIBBEAN MOVE TOWARDS REPUBLICANISM. Following the death of Britain’s Queen Elizabeth II on 8 September, at least six Caribbean countries have indicated a desire to follow the recent example of Barbados in November 2021 to remove the British monarch as head of state and to replace him with a homegrown president, namely Antigua & Barbuda, The Bahamas, Belize, Grenada, Jamaica, and St Kitts & Nevis. St Vincent & the Grenadines also indicated a similar intention in July.

A related cause is the demand for reparations from the UK for its role in the slave trade. A reparations commission was established by Caricom in 2013 with the aim of developing the “moral, ethical, and legal case” for compensation to be paid by the former colonial power to Caricom nations. It is thought that the Queen’s death could give further impetus to these demands.