Good morning and welcome to the 2019 Caribbean Forum on Regional Transformation. I am very glad to see old friends, and new faces. Thank you all for sharing your time with us today. I would also like to thank the Government of Barbados for its warm hospitality, and Prime Minister Mottley for her strong support for the Forum. I would also like to thank the Caribbean Development Bank for their great effort in co-organizing this event with us.
The annual Forum—the ninth in the series—is an important platform for brainstorming and collaborating with key stakeholders on the challenges facing the region and the possible solutions to address them.
This is the first time I have the pleasure of visiting this beautiful country. Let me congratulate Barbados on its excellent progress in implementing the Barbados Economic Recovery and Transformation Program, or better known to some of you as simply “BERT.” Public debt is now on a clear downward trajectory, which is one welcome indicator of the progress being made under “BERT.”
I also want to express my deepest sympathies to the government and people of the Bahamas for the loss of life and devastation caused by Hurricanes Dorian. The recent hurricane has once again highlighted the special vulnerabilities of the Caribbean, and the continued need to strengthen resilience. I am glad that this forum will devote a special session to explore a better way to build resilience.
The theme of this forum is regional transformation. I think this is important, because regional transformation is essential to support higher economic growth for the Caribbean. For too long, economic growth in the Caribbean has languished, offering too few opportunities, in particular, for its young people. This has led to rising social and economic challenges—including poverty, inequality, unemployment, and crime.
Transformation is the “T” in Barbados’ BERT program. It is about exploring the opportunities that new technology offers and overcoming obstacles that have held back the region for too long. So, what can be done to move forward? That is what brings us together this morning.
As reflected in our agenda, to those of us working in this area, three areas are vital to regional transformation: (1) regional integration and leveraging common institutional arrangements; (2) working towards a disaster resilience strategy; and (3) improving tax policy. Let me offer a few brief thoughts on these topics, before passing the baton to our panelists.
The first is Regional Integration
Deeper economic integration within the Caribbean has been a priority since the establishment of CARICOM in 1973, but progress has been limited. Recent work by IMF staff found that greater intraregional trade and mobility of people and capital could generate significant macroeconomic benefits.
Today’s discussion will look at possible actions to boost the regional integration process. One example would be reducing non-tariff barriers and trade costs stemming from the absence of harmonized customs laws. Another would be removing legal restrictions that constrain the free movement of people and capital.
Second, Climate Change and Disaster Resilience Strategy
As I mentioned earlier, climate change is expected to intensify the impact of natural disasters and worsen the vulnerabilities of small states in the Caribbean. Rising sea levels increase risks of erosion and flooding, and warmer water temperatures heighten the potential for more intense hurricanes. We must come together to address the challenges posed by climate change and help those most affected by it.
Recent IMF analysis identified a three-pillar strategy for building structural, post-disaster, and financial resilience.
Structural resilience will require infrastructure and other investment to limit the impact of disasters.
Post-disaster resilience aims to facilitate a speedy recovery after an event, supported by contingency planning such as emergency response planning and related investments.
Emergency relief and financing the reconstruction effort following catastrophic events like Hurricane Dorian is a key responsibility of the global community. Soon after the hurricane hit, leaders of the CARICOM showed strong solidarity with The Bahamas, including by deploying security forces.
Financial resilience is built based on fiscal buffers and using pre-arranged financial instruments to protect fiscal sustainability and mange recovery costs. Recognizing the need to support our members in the event of a natural disaster, the IMF has recently increased access to both our Rapid Financing Instrument and to our Rapid Credit Facility to 50 percent of quota per year and 100 percent of quota on a cumulative basis. Several countries in the region, including Dominica, Saint Lucia, and Saint Vincent and the Grenadines, have made use of the RCF over the last decade.
Two countries are piloting a Disaster Resilience Strategy: Grenada and Dominica. I look forward to hearing their experiences, including more about their challenges and constraints.
Lastly, Improving Tax Policy
All Caribbean countries face the challenge of how to maintain a tax system that is competitive, while also raising adequate revenue. In the regional context, avoiding a race to the bottom could provide substantial collective benefits. But how to achieve this is a problem that has challenged the region for decades—in particular, in light of the bargaining power of large tourism services providers. Today’s discussion provides an opportunity to hear views from policy makers, taxation experts, and industry representatives on these points.
To conclude, I would like to highlight the great importance I place on today’s discussions, which I am confident will benefit all of us. I would also like to emphasize that the IMF remains fully committed to assisting and supporting the Caribbean countries. I look forward to fruitful discussions and engaging with all of you on the important topics before us. Thank you very much.