The Caribbean Development Bank (CDB) has warned regional governments to fortify their health care systems and do more to push private sector development as economic activity across the region has virtually “collapsed”.
In its just-released 2019 annual report the Barbados-based regional institution lamented that many of the economic and social gains achieved last year and hopes of improved prospects for 2020 had been wiped out by the novel coronavirus (COVID-19) pandemic.
Bank president Dr Warren Smith, in his statement to borrowing member countries (BMCs) said their financing needs are “enormous, demanding resources far beyond CDB’s capacity,” while the bank tries to “pursue and leverage international partnerships to secure improved access to concessionary funds”.
And according to the bank’s statistics, last year Barbados was among the biggest recipients of CDB funding, borrowing $209.6 million (US$104.8 million) from the institution. That amount was topped only by St Vincent and Grenadines, which borrowed $223.8 million (US$111.9 million).
The CDB said in its 2019 annual report: “At the start of 2020, CDB was projecting regional economic growth, consistent with forecasts of increased global economic activity. Since then, there has been the rapid global spread of the novel coronavirus, with significant adverse impact on developed and developing countries.
“With many countries going into lockdown to contain the spread of the virus and to ease pressure on health services, economic activity collapsed. Closure of borders led to a rapid decline in international travel, putting pressure on transport providers, particularly airlines. Governments and central banks announced fiscal and monetary policies in an effort to protect businesses and workers.”
Outlining the dire economic and social consequences across the Caribbean, the bank warned that the COVID-19 impact was “significant”, adding: “Many tourism dependent economies reported mass cancellations. Hotels had become virtually empty by March, and cruise ships ceased to operate.”
Even the new economic star in the region, Guyana, buoyed by historically large oil finds, was not spared, the bank revealed. “Commodity producers were also affected. Guyana made its first delivery of crude oil in January. Since then, a price war between Saudi Arabia and Russia caused prices to decline below the breakeven price in Guyana’s oilfield.”
Offering little certainty about what was likely to happen over the rest of 2020, the bank urged governments to take pre-emptive actions as the depth of the crisis was still unknown.
“The duration of the impact is difficult to predict; but foreign exchange earnings, income, employment, public sector indebtedness, and government revenues and expenditures are likely to be severely affected,” it revealed.
As to the mostly tourism-dependent nations of the region, the CDB said the industry’s recovery will depend on the extent to which the outbreak is contained in major source markets that include Canada, the European Union, United Kingdom, and the United States of America where the outbreak is heading for close to five million cases.
It noted, too, that visitors in those tourism markets will likely make decisions to travel based on economic activity in their home countries, and confidence in the safety and security measures surrounding international travel.
The CDB called on Caribbean governments to not lose focus on preparing their countries for disasters such hurricanes, even as they fight the pandemic.
It said: “BMCs need to return to the theme of building resilience. Disaster preparedness and healthcare systems will need to be fortified, possibly using enhanced digital technology. Parametric insurance and contingent credit facilities should be broadened to cover pandemics.
“In addition, increased emphasis must be placed on promoting private sector development and new sources to earn foreign exchange by, for example, diversifying the economic base and strengthening the regulatory and institutional framework.”
