“Outturns in relation to foreign exchange reserves were mostly positive, proving adequate import cover, in line with balance of payments (BOP) outturns,” and “most BMCs continued to hold reserves in excess of the international 3-month/12-week benchmark.” ~ CDB’s Caribbean Economic Review & Outlook, 2014
In the face of average inflation for the region, estimated at 2.3% in 2014, and a change in Debt/ GDP ratio 2014 of 91 percent, according to the CDB, “The CDB is positioning itself to champion the cause of fast tracking the integration process, in order to support private sector led growth, focusing on the need to:
• Enhance regional financial integration, including the development of harmonised supervisory and regulatory frameworks, to facilitate the movement of capital around the Region while preserving financial sector stability; and
• Improve intra-regional transport and logistics to increase efficiency of movement of people, goods and services around the region and tap into the growth potential of global value chains.
However, many of the required policy actions will require an appropriate institutional framework and supporting action at the regional level and governments also need to undertake structural reforms and the resulting framework.”
Dr Justin Ram, director of economics at the CDB, speaking on the performance of regional economies, tabled the following policy actions to promoting sustainable and inclusive growth:
• Fiscal Consolidation: fiscal rules, increase efficiency of expenditure, maintain capital investment, reform of subsidies
• Social Protection: targeted approach to social safety nets
• Energy Reforms: provide the regulatory environment to increase use of Renewable Energy (RE) in energy mix and greater Energy Efficiency (EE)
• Human Capital Development: Investment in quality education for all, with emphasis on science, technology, engineering and math (STEM)
• The Need for Higher Savings: both public and private
• Improve the Investment Climate: make it easier for private sector to thrive (doing business reforms)
• Labour market reforms: increase flexibility and freedom of movement.
• Regulatory and Governance reforms: strengthen institution, improve transparency and accountability.
• Improve Regional Transport and Logistics: increase efficiency of movement of people and goods across the region and tap into the growth potential of global value chains via improved logistics.
“In 2014, we, at the CDB continued our efforts to help borrowing member countries to keep growing their economies. Sustained economic growth is important because it has the potential to improve the lives of the more than 16 million men, women, and children living in our region.
“Economic recovery, although still at a modest pace, continued for the fourth consecutive year in the Caribbean. Policy-makers sought to overcome the legacy effects of the Great Recession, and the setbacks associated with weak commodity prices. Issues of adjustment, competitiveness, resilience and access to finance for investment dominated policy discussions throughout the year.
“Meanwhile, at CDB, internal reforms continued apace. Two years of focused policy changes; capacity building; and intensified policy discussions with borrowing member countries began to yield the desired results,” said Dr Warren Smith, president of the CDB.
Smith explained that Standard and Poor’s (S&P) revised its rating for CDB from “negative” to “stable” and affirmed its “double A” status on its foreign currency ratings.
S&P linked the improvements to:
1. the abatement of external liquidity pressures among some of the bank’s largest borrowers;
2. high capital adequacy;
3. members’ strong commitment to the Bank; and
4. the strengthening of risk management structures and monitoring over the past 18 months.
“Last year, we recorded a 61% increase in loan approvals to $270 million from $167 million, thus providing financing for more development projects in 2014 than in 2013. In 2014 CDB projects continued to transforming communities, improving lives! Let me highlight some of these projects,” Smith added.
Unlock sustainability and inclusive growth
CDB provided a US$10 million loan to Belize’s Development Finance Corporation (DFC) to provide financing for priority sectors. Among the DFC’s lending objectives are the improvement of home ownership, human development and the development of micro, small, and medium-sized enterprises (MSMEs).
The CDB loan will allow the DFC to provide finance for these MSMEs as well as student loans, credit for low-income housing and also for energy efficiency/ renewable energy projects.
During the period December 3-5, 2014, in Barbados, CDB hosted a three-day sub-regional train-the- trainer workshop (TTW) on management accounting systems for micro, small and medium-sized enterprises (MSMEs).
“The workshop addressed the critical need for MSMEs to put in place appropriate management accounting systems, particularly within the environment of a computerised management accounting system. These systems enable MSME operators to record, track and generate financial information in order to make informed internal decisions, generate better projections, and be able to provide relevant and timely information to financial institutions when seeking financing for working capital and to upgrade and expand their operations,” said Edward Greene, division chief for CDB’s Technical Cooperation Division.
The goal is for the knowledge and skills of MSME operators, as well as the overall management and operational performance (profitability and competitiveness) of participating MSMEs to be enhanced.
Also, the ability of the Immigration Department in Barbados to function effectively was greatly enhanced by a loan of US$6.474 million from the CDB, amongst the priorities identified by government of Barbados as part of its medium-term growth and development strategy (MTGDS) 2013–2020 which include: “enhanced international competitiveness, national productivity; efficiency and service excellence” and “more modern and efficient public and private sector institutions.”
Efficient immigration services are key to enhanced competitiveness and productivity as inputs to job-led growth and development. Immigration services revolve around border control and security; issuing of passports; and processing of applications for various forms of immigration status. The effective functioning of that Department has implications for the main export-earning sectors of tourism, and the international financial services, as well as the business community.
The Caribbean Technological Consultancy Services (CTCS) Network, a programme within the CDB, hosted consultation meetings for both its network stakeholders and for operators of MSMEs during the Bank’s 45th Annual Board of Governors (BOG) meeting in Georgetown, Guyana, in May.
The stakeholders’ consultation was followed by the two-day MSME consultations including representatives of key cooperating institutions (CIs) in the participating borrowing member countries (BMCs). They were joined by several counterpart CI representatives and selected MSMEs, from regions across Guyana geared towards fostering a stronger and more robust CTCS network among CDB’s BMCs and to extend the range of effective CTCS coverage in Guyana.
A CDB and Belize Social Investment Fund (BSIF) host procurement workshop for contractors and consultants in Belize, was led by CDB’s head of procurement, Douglas Fraser. The workshop aimed to provide participants with a deeper understanding of CDB’s procurement guidelines, and to address good procurement practice, contract management and accountability, as well as broader areas of supervision of projects and sub-projects implemented by BSIF and other stakeholders.
The CDB stresses conformity to transparency and integrity in tendering and contract award, and the proper use of grants and other funds. They also target improvements in the responsiveness and efficiency of development strategies.
Grenada has been a member of CDB since 1970 with approvals totaling US$236.8 million, which represent 5.6 percent of total approvals to its BMCs, primarily to support the development of economic infrastructure.
To support the reform priorities of the government of Grenada, three US$10 million policy-based loans (PBL) have been proposed to restore fiscal and debt sustainability and promote strong, sustainable and inclusive growth.
“This PBL is a blend of ‘hard’ and soft resources designed to support Grenada’s policy reforms and to improve the country’s debt dynamics,” the CDB said.
Ram, in accessing the risk and opportunities for the global economy, notably the upcoming UK election, and resulting fiscal changes and the outcomes of further austerity measures, the ongoing situation in Greece, oil price uncertainty that has implications for potential inflation trajectories in 2015 and the worsening of current geopolitical tensions, global public health concerns, the US economy, falling unemployment but threat of higher interest rates, was optimistic of the regional outlook and policy priorities and that world growth is set to speed up slightly from 3.3 percent in 2014 to 3.5 percent in 2015, according to the IMF January 2015 update.
With these indicators, “CDB will maintain its focus on providing regional decision-makers with the policy tools and financial support to deal with the pressing challenges they face in their efforts to unlock sustainable and inclusive growth,” the CDB said.
Melanius Alphonse is a management and development consultant. He is an advocate for community development, social justice, economic freedom and equality; the Lucian People’s Movement (LPM) www.lpmstlucia.com critic on youth initiative, infrastructure, economic and business development. He can be reached at firstname.lastname@example.org
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