OFFICIAL OPENING REMARKS DR. THE HON. TIMOTHY HARRIS, PRIME MINISTER 2015 HIGH LEVEL CARIBBEAN FORUM“FINANCING GROWTH” Frigate Bay, St. Kitts 3 – 4 September 2015
Ladies and Gentlemen, good morning and welcome to our two beautiful islands, one paradise of St Kitts and Nevis. This is a country moving forward on the people’s agenda for prosperity. It is indeed a great honor for me to extend my personal expressions of welcoming you to our beautiful twin island Federation of St. Kitts and Nevis and to this the fourth High Level Caribbean Forum.
The series has become necessary because our region has been buffeted by high debt, high unemployment and fiscal imbalances, and needs fresh thinking as to how we can grow at a sufficiently high level to meet the commitments of the state and the reasonable expectations of our people for a better life. Sometime back, thanks to the ECCB, we, in the OECS have also begun to discuss the inadequacy of economic performance and posited an eight point strategic plan to take our sub region forward.
Additionally, the IMF as a significant provider of policy advice, is working with its Caribbean constituency to ensure that our region achieves a higher level of growth in a more consistent and sustainable manner than has hitherto been the norm, hence the series of consultations on growth.
This year, as in the past three (3) years, the theme is focused on growth in the region, and more specifically, how we finance the growth that we are trying to achieve. Our discussions over the next two (2) days will examine the cost of energy and how this could be reduced, attracting foreign investment to the region and the accessibility of credit to the productive sector. Efficacious outcomes in all three areas would redound to positive impacts on growth.
Since 2008, the region has been struggling to return to the growth levels that we experienced prior to the global economic crisis. Relative to the Latin American economy our region growth has been subdued. We have brainstormed at both our individual country levels and as a group on ways to reverse the impact of the crisis and grow our economies in a sustainable way. At these High Level Caribbean Fora, we have explored ways of addressing low growth, building growth into our Sustainability Agendas, unlocking economic growth and over the next two (2) days we will discuss financing growth. It is because growth is so crucial to the development of our economies and more so to the improvement in the lives of our people, that we are determined to develop a strategy that will strengthen the investment climate for the region and promote private sector development. It is no longer a tenable proposition that the public sector can be the sole major contributor to a country’s economic growth. The private sector must play a role as well.We therefore welcome the advice of our regional and international partners such as the Caribbean Development Bank (CDB), Central Banks, the World Bank, the IMF and our private sector in this regard and for their assistance we say thank you.
Partnership
Sustainable growth requires partnership. Partnership among economic actors, partnership between public and private sectors, partnership between government and government, and partnership between government and International Financial Institutions. No man is an island. No island is too large to need the support of another even one smaller than itself. In the context of the imperative partnership, my government hails the constructive partnership that we have had over the years from the European Union, the Governments of Canada, U.S.A., and Venezuela to name a few. We acknowledge the support from Republic of China (Taiwan) and Kuwaiti Fund that have been especially responsive to our needs.
The IMF, World Bank, CDB and a number of other international bodies have, in recent times, combined their efforts to facilitate a number of Growth Forums throughout the Caribbean. The Growth Forums were intended to promote dialogue among the private and public sectors as we seek a means by which we can create sustainable and inclusive growth.I am firmly of the view that the effects of such growth should be felt by the entire population of our countries and not by just a selected few. It is imperative that as our countries recover from the prolonged recession, that all of our citizens and residents, and especially the vulnerable in our society, experience a better way of living; a more comfortable and wholesome lifestyle. It is imperative that the vast army of young people experience improvement in their lives. For too many of them, the system has not been working.
The high cost of fossil fuel for oil importing countries has created a real constraint on growth and competitiveness. That high cost has led to the accumulation of billions of dollars in arrears by participating member PETROCARIBE states to the Government of Venezuela. Recently, the Venezuelan Government has restructured the indebtedness of several of its member states. Thankfully, in recent times, oil prices have trended downwards. I am therefore quite pleased that this afternoon’s sessions will be dedicated to the energy challenge. In St. Kitts and Nevis, we are fully cognizant that we cannot continue to rely on fossil fuel, when better alternatives are available. As such, we have been encouraging and providing our nationals with incentives to use alternative forms of energy which would reduce their energy costs over the long-term. In addition, solar technologies, wind energy and geothermal energy are sources that are actively being explored for the Federation with the intention of providing a more affordable energy supply for our people, and our industries. We look to geothermal energy and the prospects for new jobs, new skills, new niches and a new source of foreign exchange and economic growth.
Financing Growth
Another factor that has been deemed to impede growth in the region is access to low cost financing. We have been encouraging our youths to become entrepreneurs and to be innovative. We have also been encouraging our local businesses to expand and play their part in the development of our economies. However, too often these entities are unable to obtain the requisite financing for start-up capital or expansion. The availability of credit to businesses is essential to economic growth in the region. In the Eastern Caribbean Currency Union, we are advised that there is sufficient liquidity in the banking system but we seem to be unable to unlock these resources so that they could be accessed by those who have a clearly articulated plan to do business. We want SMEs’ to emerge adding value along the production and distribution chain. We want innovative entities linked to growth to receive low cost financing. We want our artistes, our new talented young people in arts, culture, music etc to receive financial support to move forward and onward. We note that great potential as an export sector for our culture and arts.
We are cognizant that the matter of financing growth is a challenge given that oftentimes some form of debt has to be utilized to undertake the activities that will spur growth. Both the public and private sectors would have to determine the optimal solution for their financing needs while at the same time exhibiting fiscal prudence. We are only too aware of the vulnerability of our region to natural disasters and the devastation they can cause. Devastation that erodes, in a matter of hours and sometimes less, the progress that has taken us years to achieve. In this regard our hearts and prayers go out to the Government and people of the Commonwealth of Dominica where lives and property were lost during the passage of Tropical Storm Erika. We wish the people of Dominica to know that in their moment of tragedy and grief, we stand ready to help in whatever way we can.
Dominica was brought to near devastation by a weakening storm. This fact highlights the challenge and vulnerability of the SIDS in the region. Within hours twenty years of progress was lost. The need for special and different treatment of small countries must be self evident. The international financial institutions must do more to ensure that the vulnerability index is superimposed on considerations of GDP for determining the graduation of SIDS.
Inevitably, after such disasters, we need to rebuild lives, homes, communities and our countries. The restoration of critical infrastructure will usually be prioritized as the resumption of essential services would be vital. This is a challenge for our Governments that are already laden with high debt and are seeking viable ways to address debt issues. More often than not a government that has to restore key infrastructure would have to borrow the requisite funds. The additional borrowing, which most likely would not have been planned, and depending on the country’s classification, would have to be contracted at market rates, places unexpected pressures on Governments’ limited financial resources.
Delay in action vitiates growth. Who then will help us as small countries recover and grow? Who among the international financial institutions? Who among our development partners will provide the resources for us to move on from the valley of dry bones to a new life and a new hope? Whether bound catastrophic insurance for our region? This matter of insurance and reinsurance is a crucial one.
Public Private Partnerships
Colleagues, this is an opportune time for us to progress to wider use of Public-Private Partnerships (PPPs) as a solution for financing and executing large infrastructure projects.The CDB has launched a Regional Public Private Partnership Support Facility and will be providing assistance to Governments in the implementation of PPP Programmes. We need to forge ahead with such options which can be beneficial to our growth agendas. For us in St Kitts and Nevis we are looking to PPP to advance the construction of critical infrastructure and legacy investments like a new cruise pier, a unity bridge linking our two islands by sea and across country road joining east and west of our island.
Our path to growth is impacted by externalities as much as by domestic policy.
I speak specifically to the recent Black Listing of a number of our countries by the European Union which was done without proper justification or communication with the affected countries. The manner in which this was done leaves much to be desired and has been rather difficult to comprehend given that so many of the countries that were blacklisted were either fully or largely compliant with the OECD Global Forum’s international standards for transparency and exchange of information. Such an action has the potential to adversely impact the financial services sector of many of our countries; a sector that makes a significant contribution to economic growth and development in the region. With the continued targeting of this sector by Developed countries, we need to become more involved in discussions that are being held at the international level on matters that affect the sector. At the same time, we should also consider other viable niches in which we can engage and which may have a similar impact on economic activity.
Ladies and gentlemen, there must be a way to ensure that there is a balance between achieving sustainable growth and the associated cost to achieve that growth. We seek the support of our Development Partners in ensuring that facilities are made available to us, as a region, that recognize our uniqueness and our vulnerabilities, that offer concessional financing especially when disasters do strike and that provide assistance with building resilience against not only natural disasters but climate change as well.
It is my hope that by the end of this Forum, we will establish a definitive path towards the financing of growth in the Caribbean so that by the next time we meet, we would have made significant progress in the implementation of our Growth Agendas. I thank you all for taking the time to attend this Forum and look forward to your participation and sharing of your expertise. Without further ado, it is my honor and pleasure to declare the 2015 High Level Caribbean Forum open.
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