PM says COVID-19 has reversed gains made by tourism-dependent countries

Prime Minister Mia Mottley today estimated that the COVID-19 pandemic may have set back tourism-dependent economies by some 20 years.

Her comments came during the International Monetary Fund (IMF) forum on Natural Disasters and Climate Change, where she was joined by IMF Managing Director Kristalina Georgieva and other world leaders.

“[Georgieva] said that the tourism-dependent countries have been among the hardest hit. Let me put it in even further context – the only countries that have been worse hit than us last year are war-torn countries. Our declines have been double-digit in most instances in the Eastern Caribbean; they hover around 18, 19 per cent,” Prime Minister Mottley said.

“So this thing has reversed us at least by a decade in terms of nominal terms, but more like two decades in terms of real losses.”

Mottley explained that as long as natural disaster clauses are not written into agreements between some small island developing states and their borrowers, unfortunate natural disasters, and more specifically pandemics such as COVID-19, will continue to trigger adverse effects on these economies which will not have the flexibility to cope with such incidences.

“The absence of those clauses have meant that many countries literally have put at risk their capacity to have an environment of certainty as to how they go forward, largely because the increased debt that has come during the process of the pandemic has come on what existed before. That is why I believe there was an attempt to help the Debit Service Suspension Initiative, but for many middle-income countries who are small-island developing states, or who are not capable of relying on international capital markets, this became an issue for us,” she said.

Mottley added that although Barbados was among countries lucky enough to have such agreements with lenders, the lack of foresight into a possible pandemic situation, and thus no clause for it, has placed the island in a precarious situation, in terms of its economic standing for the next several years.

“If we had had it [the clause] with the pandemic, we would have been able to remove, on average, seven to eight per cent of our own GDP in terms of fiscal space, to meet the concerns. Our debt has gone from 177 per cent to 118 per cent, and it has gone back up now to 152 per cent, largely as a result of the pandemic.

“The majority of that – 30 percentage points of that – is not because of increased borrowing but because of contraction of our economy,” Mottley pointed out.

The Prime Minister also maintained that although G7 countries such as the United States, Canada, France, Germany and others have promised to deliver roughly one billion vaccine doses to smaller nations that are still trying to come to grips with pandemic and the resulting stagnation of their economies, not enough attention is being placed on the climate crisis and the debt that smaller countries are still trying to cope with.

“The notion that you are going to give one billion vaccines by the end of this year does not help countries who are tourism and travel dependent, and who have to open back up their economies because they face either economic implosion if they keep their borders closed, or literally the virus running rampant and causing too many people to die on our shores,” the Barbadian leader said.

“When we see these big ticket items at the helicopter level, when you drill down and ask what does that really mean for these countries, you begin to understand that it does not move the needle very much. That is why I believe that the Resilience and Sustainability Trust that [Georgieva] is trying to do, is the closest thing that comes to where we needed to be.” (SB)