BASSETERRE, St. Kitts – THE global economic and financial crisis has created a number of problems for fiscal sustainability for many countries, but recovery over the next few years will help to avert further instability and bring peace, according to the International Monetary Fund (IMF).
As countries the world over are making their way out of the crisis at various speeds, IMF Managing Director Dominique Strauss-Kahn argues that this global economic recovery will lead to political and social stability and peace.
“History is replete with examples of how economic and financial insecurity stoke social tensions, which in turn can undermine political stability, and even result in war.
“Getting the economy right—and addressing threats to its stability—can play an essential role in fostering the conditions for peace,” he said.
Strauss-Kahn cautioned that countries must be careful in withdrawing stimulus packages that were designed to give relief and combat the effects of the crisis. An exit from such programmes should be actualised only when economic activity is sustained and countries are set on a path to economic growth.
“If you exit too early, then the risks are much bigger. Private demand must have recovered before the stimulus is withdrawn,” he warned, adding that the IMF’s assistance can be used in periods of conflict and instability, where the threats to economic security are the greatest.
While the IMF continues to provide aid to countries suffering from shock and conflict, the Eastern Caribbean Central Bank (ECCB) has been seeking to strengthen economic security after the region was subjected to great social and political stress.
“We still have to be very vigilant and continue to monitor the financial system. Fiscal constraints and high debt to GDP ratios continue to challenge us, and many of our social indicators are under stress,” said ECCB Governor Sir K. Dwight Venner in his January 29 Economic Review of 2009.
Heads of Government of the Eastern Caribbean Currency Union (ECCU) have set timeframes for the successful implementation of its Eight Point Programme for sustainability, with 2010-2012 as a period of adjustment and 2013-2020 as a period of transformation.
This approach is expected to heal the region’s financial sector from crisis and strengthen it to foster social and political stability and peace in the ECCU.
