Economist raps World Bank rep

by Marlon Madden

Economist Jeremy Stephen is “aggrieved” that a top official of the World Bank has suggested that Barbados and other regional states should not count on getting any debt forgiveness, even as they struggle to maintain an adequate welfare system amidst widespread negative impact from the COVID-19 pandemic.

Stephen chided World Bank Chief Economist for Latin America and the Caribbean Martin Rama, for his stance that the chances of debt relief were slim, partially because “many of the Caribbean countries are among the richest in the region”.

During an online session with English-speaking Caribbean journalists on Friday, convened to discuss aspects of the World Bank’s semi-annual report, Rama said he would not advice the region to bet on getting debt relief, though they could still lobby.

“I will not bet on it happening because Caribbean countries are relatively rich in the developing world.

“I would say aim for it, lobby for it, but have a plan B,” said Rama, who also suggested that with relatively low debt, the region should consider growing alternative sectors to tourism while considering fiscal consolidation measures.

However, in an interview with Barbados TODAY Stephen addressed those comments, saying it was simply not fair for lending institutions to take a broad-based ºapproach when dealing with issues facing Caribbean economies.

He argued that by lumping countries, multilateral institutions could easily overlook the unique peculiarities of each, causing some economies to further suffer.

“It is not necessarily fair to say that the anglophonic Caribbean is wealthy when in fact, what is wrapped up in there might
involve colonies.

“Then you can’t rope in the Bahamas in the same boat as Barbados – different industries, different economic make-up and different vulnerabilities given our source markets.

“Within the Organisation of Eastern Caribbean States (OECS) there are a lot of variables as well that have to be considered,”
Stephen insisted. He said Rama’s comments were “disheartening” considering how at-risk the region is.

Stating that any debt to gross domestic product ratio above 100 per cent was considered high, Stephen said with many economies facing increasing debt as a result of the COVID-19 pandemic and given the susceptibility to hurricanes, it was prudent that lending agencies offer some form of debt relief on a country-by-country basis.

He said if debt relief was given it would easily allow regional governments space to protect citizens’ basic rights or needs should a major issue with the weather take place next year.

“While I agree there is a need to reform Government in a practical manner and as soon as possible, I still believe there should be some element of understanding as to why some debt has to be forgiven particularly for infrastructure programmes at this time,” he added.

Stephen told Barbados TODAY that while he agreed that economic diversification was urgently needed, it would not happen overnight.

The university lecturer said if the World Bank and other multilateral institutions were serious about helping Caribbean countries to achieve their developmental goals then that should be reason enough for them to consider some form of debt forgiveness.

“Each country’s recovery cannot be treated as similar and as a result, debt forgiveness should be given on individual merit – how vulnerable the country is to a slide that forces it not to be able, if it was trying to do so before hand, to achieve the development goals of 2030,” he said.

Stephen predicted that some economies might not be able to pay down their debt or provide adequate social protection for citizens during the ongoing pandemic without “disrupting human development” over the next three to four years.

marlonmadden@barbadostoday.bb