There are no quick fix solutions to the Caribbean’s economic troubles with or without the International Monetary Fund (IMF).
Former Prime Minister Owen Arthur issued this advice as he delivered the Sir Archibald Need Memorial Lecture in Grenada today entitled Can the prescriptions of the International Monetary Fund solve the economic problems of the Caribbean?
Clearly listing the severe challenges confronting regional economies, which include high debt, low or no growth, and unsound fiscal positions, he made it clear that “countries facing such a brutal reality must draw therefore upon more than what the IMF provides for”.
Arthur, an economist, argued that “it is the resilience of the people of the Caribbean rather than the content of programmes within the IMF in the Caribbean” that will determine whether countries succeed or fail.
“It is the special character of a people who have survived and risen above slavery and indentureship, racism and the exploitation of colonization.”
He said that like the region, the Washington-based financial body appeared to be “caught between two worlds; one that is dead or dying and the other that is struggling to be born”.
While noting that the nature of the IMF’s programmes, which largely took the form of painful standby arrangements in exchange for funding had evolved in 2009 with the establishment of the Flexible Credit Line, Arthur pointed out that this programme, which was designed to meet the demand for crisis prevention to countries facing a fast cash crunch, was not without shortcomings.
“The new type IMF programmes will not in and of themselves solve the problems of the Caribbean. At best, they will function as catalysts which can trigger access to additional resources, and help to generate new policy responses from others that all together may help to make a situation which started as being unsustainable, come into the realm of being manageable.”
The programme, which he said was soon to become operational in Grenada, which is set to benefit from US$21 million from the IMF, was a complex undertaking.
Insisting that it was not a criticism of the government which he said had little choice but to act, Arthur however warned that the programme would “require great sacrifice and discipline, and may cause some pain in the process”.
He expressed concern that under the Flexible Credit Line, Grenada would not get adequate financial resources to finance its way out of the debt and cash crunch crisis that it faces while having to meet specific requirements.
Arthur advised the Keith Mitchell administration that restoring fiscal stability would only come by measures it would have to implement itself to generate more revenues, curb spending and reduce its debt.
He stressed that the Grenada government and its regional neighbours would have to expand existing enterprises and create new ones to achieve growth, job creation and the reduction and eradication of poverty.
“Indeed, the totality of the adjustment that will be required to solve the problems will be the sum of those undertaken by the government in response to the national challenges, those undertaken by enterprises to improve and reform their balance sheets, and those undertaken by the people to ensure that they can enjoy successful livelihoods.
“In this regard rapid progress with erecting strong IT platforms, carrying out the reforms to make the ease of doing business in the Caribbean meet international best standards, and putting in place arrangements to embed entrepreneurship and innovation as more important factors in the new economy the region must create, must be important components of the response to the challenges to be met.”