(CARICOM Secretariat, Turkeyen, greater Georgetown, Guyana) The Caribbean Community’s (CARICOM) concerns on the impact of the global economic and financial crisis and its views on the related reform of the international financial architecture were conveyed to the members of the Group of 20 (G20) in time for their Summit which took place in London on 2 April 2009.
The Region’s financial distress as a result of the crisis was highlighted with particular reference to the fallout of the regional conglomerate, CL Financial Group (CLICO), which has had a very adverse effect on a number of Member States. The Region was also hit by the effects of the United States Ponzi scheme-like operations in the United States banking subsidiaries whose impact was severely felt in Antigua and Barbuda and St Vincent and the Grenadines.
Underscoring the impact on other sectors in the regional economy, the Community pointed to the tourism sector which has experienced a dramatic decline in arrivals and low occupancy rates in spite of reduced rates. Tourism-related local productive sectors have also been negatively affected as well as airline and ground transportation. The crisis has also meant layoffs in some of the region’s larger industrial, financial and service enterprises, slow down or the shut down of businesses in several Member States. Large investment projects which were on the verge of being initiated have come to an abrupt halt in some of the Member States
The Community posited that while its Member States were focused on devising counter cyclical measures to mitigate the effects of the crisis and exploring means of strengthening their financial regulatory frameworks at a national level and, also, at a consolidated regional level to deal with the cross-border effects, they had not lost sight of the origins of the global crisis and the need for reform of the international financial architecture that serves the interest of both developed and developing countries.
The Community pointed out that the reforms that were of particular interest to Member States included the need for special treatment to be accorded to highly indebted middle income countries (HIMICs) who found it difficult to grow out of their debt without special assistance from the international community, because of a number of structural vulnerabilities. The Community further argued that CARICOM countries should not be graduated out of access to concessionary loans on the basis of mere per capita income, particularly since such a level of income may not be sustainable.
In addition, the international community needed to level the playing field with regard to the treatment of the offshore financial jurisdictions in small developing countries. This was important because of the limited scope for structurally dependent economies to diversify their economies. Moreover, the countries in CARICOM were encouraged to diversify into services not only by local advisors but, also, by the international community who suggested that services were the best alternative to real sector production.
The Region was also concerned about the worsening security fall out from the crisis, pointing out that hundreds of thousands of persons may slip back into poverty if the crisis persisted for another 18 months, as was the worse case scenario. The Community was of the view that it would be hard pressed to contain the crime situation, which was already grim as a result of the drugs and related guns trade.
