Expansion critical- A case for bigger CDB role

If the Caribbean Development Bank (CDB) is to assist its 19 borrowing member countries to meet the United Nations Special Development Goals (SDGs), further expansion of the bank will become necessary.

The suggestion has come from recently installed President of the Barbados-based institution, Dr Gene Leon, who said if the bank was to be an effective partner in the globally challenged environment, then adjustments will be required.

“If the Bank is to function as an effective development partner in the drive towards the SDGs and beyond, it must remain relevant and fit-for-purpose, and be appropriately sized, skilled and structured.” He pointed to the predicted financing gap which will impact on Caribbean countries’ efforts to meet the SDGs as one of the factors driving the need for such a rethink of the CDBs position.

The SDGs, which were adopted in 2015, are regarded by United Nations as the blueprint to achieve a better and more sustainable future for all citizens. They address the global challenges including poverty, inequality, climate change, environmental degradation, peace and justice.

“Our preliminary estimates suggest that to reach our goal of halving poverty by 2030 would require more than a doubling of average CDB lending,” the top CDB official said.

According to Dr Leon, since committing to the UN’s 2030 Agenda for Sustainable Development in 2015, only seven of the bank’s 19 BMCs had submitted voluntary national reviews, reporting on the pace of SDG implementation.

Among those that were submitted, most reviews cited inadequate funding and responses to natural hazards as continually thwarting efforts to achieve the SDGs while insufficient data and statistical capacity affected policy responses, the CDB President noted.

The CDB president sounded the alarm that endeavours to meet the goals were “not advancing at the speed and scale required in the bank’s 19 BMCs”.

In response, the CDB president offered to create a data hub at CDB, adding: “As a starting point, we need to measure better to target better.

That includes building data architectures and databases to better inform our evidenced-based decision making; involves improving capacity in data analytics, leveraging developments in big data and digital technology; and requires better measurement of the impact of our vulnerabilities and articulating better the nexus among enabling resilience for increasing public value, promoting priority growth-oriented investment, and managing financing needs for debt sustainability.”

The CDB president highlighted that such a data hub could include a distance-to-SDG tracker that updated not only implementation but associated measures of distances to benchmarks, quantum of financing needs, and estimates of concessionary terms that could facilitate more rapid reductions in these distance metrics.

The data hub, he explained, could also be extended to a resilience tracker that informs on various dimensions of resilience and the region’s ability to recover shocks or sustain a growth momentum.

Also forming part of his argument for an expansion of the development bank, the former Central Bank of Barbados and International Monetary Fund economist noted that natural hazard events increased the capital needs of a country.

He suggested that the interest rate at which this capital was financed should be appropriately lower. He explained that this position was counter to the standard market dynamics, where increased perception of risk would increase the rates of interest required of countries in the wake of a natural hazard event, and would push those rates to levels that lead to adverse debt dynamics.

(IMC1)