Households in Barbados and the rest of the Caribbean face the possibility of being plunged into poverty if a number of challenges are not urgently addressed.
This warning has come from Director of Economics at the Caribbean Development Bank (CDB) Dr Justin Ram, who said regional economies should make it a priority to address the myriad of issues they face.
“When I think about individuals who are living just above the poverty line, those individuals and those households can quite easily tip back into poverty because of some event,” said Ram.
“It could be that a member of the household becomes ill. It could be that a member of the household loses employment, and quite easily that household can slip back into poverty. When I think about it that is really what our countries experience,” he said.
Ram was addressing the plenary session of the Sir Arthur Lewis Institute of Social and Economic Studies (SALISES) 20th annual conference at the Hilton Resort on Wednesday, on the topic Obtaining Economic Security for the Region: The Transformation Agenda.
He warned that although some Caribbean economies may be considered middle to high-income they did not have economic security on the global scale and therefore remained very vulnerable.
He said in order to obtain economic security and “keep our heads above the water” issues critical to development and economic growth should be addressed including high debt and fiscal deficits, the lack of a regional approach on some matters and lack of implementation of policies and procedures.
Ram also warned that measures should be put in place to safeguard against matters relating to natural disasters, and global economic shocks such as geopolitical issues and financial system requirements.
He also pointed to the need to address high unemployment, and crime and violence.
“These events are not if they will happen; they do happen. It is a matter of when . . . These are the things that can tip us back into where we have come from,” he cautioned.
The economist argued that in order for the required economic transformation to take place in Barbados and the rest of the region it would require the right kind of financing.
“You might not expect to hear this from me, but I do not think the solution in financing is going to come from multi-lateral agencies. I think in many ways, it has to come from our own savings, from our own people,” he said.
He explained that one method of financing governments could use would include raising funds from bonds with a builtin mechanism for a moratorium on payments in the event of a natural
disaster or unexpected shock to the economy.
“We are not saying you are going to lose your money, but if a disaster happens we need some breathing space, I need to say I am not going to pay you during the time I am going to rebuild.
“I think we might be able to find some investors who are willing to do that. It is sort of like an impact investing, to say that I am going to utilize your money for good to build resilience in our country to help us build economic security because we want to keep our heads above the water. We don’t want to be dropping back into poverty.
“But if that disaster happens, and that is the reality, you need to give me some breathing space, maybe two to five years for example. But of course I have to compensate you for that risk and the interest might be a little bit higher but I think it is worthwhile,” he explained.
Ram said while the private sector should lead economic growth, governments should act as the facilitator and improve the ease of doing business.
The CDB official also pointed out that education would play a critical role in the transformation of regional economies, adding that a lot of value will also be in data gathering and greater use of technological advancements.