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CARIBBEAN: Govts Seek “Clarity” from IMF, G20

PORT OF SPAIN, Trinidad, May 26 2009 (IPS) - When the G20 countries met in London earlier this year and agreed to pump more money into the coffers of major financial institutions like the International Monetary Fund (IMF), the news was largely greeted with enthusiasm by developing nations, particularly those in the 15-member Caribbean Community (CARICOM) region.

But now regional leaders say they are unsure whether they will in fact benefit from these funds, or how the money, the amount of which is still uncertain, would be disbursed and under what conditions.

In order to ensure that the Caribbean is not left behind as the new global financial system takes shape, the regional leaders, who met in Trinidad for a special summit on Sunday, have agreed to establish a five-member task force, headed by the Barbadian economist Dr. Delisle Worrell, to guide their response to the crisis that has so severely hampered their own economic development.

Guyanese President Bharrat Jagdeo, an economist by training, said the Caribbean needed clarity “because if we go to meet with the leadership of these institutions and they ask us how much money you are talking about, what facilities would you want….we would need to know.”

“What form do we need the funds to flow in? Will it come in as balance of payment support, will some come in as fiscal support, budgetary support, project-related, given that these things the disbursement schedules are different?” he said.

“We also have to determine and make a case that we are different than the large countries, we are different from other countries in the world. Most of our countries are middle-income countries, but highly indebted, but still very vulnerable,” Jagdeo said, noting that seven of the 10 most heavily indebted countries of the world are in the Caribbean.


“We have to show our vulnerabilities (and) show that a single event could have a systemic impact on our societies. So we need special attention, a special facility, special instruments. This old way of looking at us through the prism of the larger countries or conditionally based lending terms …simply would not work. Our needs are different,” he emphasised.

Caribbean leaders have argued that free market fundamentalism, the so-called Washington consensus and ideological dispensation have long underpinned the policies of institutions such as the IMF and the World Bank. Many expressed hope that while the global economic crisis has affected developing countries as much as the developed nations, it has brought new thinking to the multilateral lending agencies.

“They have to be more receptive today. Where everyone is calling for a reform of the Bretton Woods institutions, the G20 countries have agreed to this and we need to get our voices heard in this new design so that in the new design they cater for us,” said one regional technocrat.

But St. Vincent and the Grenadines Prime Minister Dr. Ralph Gonsalves said while the Organisation of Eastern Caribbean States (OECS), of which he is the chair, has recognised the changes in approaches to the IMF as result of the global crisis, those sub-regional countries were now intent on approaching the IMF “as a group to fashion a strategic response to the crisis in international capitalism”

Gonsalves said he was urging Caribbean countries that wanted to approach the IMF for assistance to do so quickly, pointing out that his own country had made use of the exogenous facility recently so as to enhance the foreign exchange capability of the island.

“It is a non-conditional fund, quick disbursement, relatively small monies but it is available to only come countries,” Gonsalves said, adding that “other countries may have to go not for the traditional draconian programmes because the IMF itself has come under pressure and is being reformed itself.”

CARICOM Chairman and Prime Minister of Belize Dean Barrow said that there was also an “urgent need” need for CARICOM “to implement a clear and focused strategy in response to the crises that have overtaken us”.

He said that the Caribbean would also have another opportunity to put forward its case at the upcoming special U.N. General Assembly meeting in June to deal with the world economic situation and to interact with high officials from the G20 countries, using the occasion “to try and hammer home our point of view as to what ought to happen with these funds.”

It is unlikely that the task force would be able to submit its report in time for the annual CARICOM Summit to be held in Guyana in July, a position that the Trinidad and Tobago Prime Minister Patrick Manning said his regional colleagues were not so worried about.

In fact, Manning is hoping that the task force recommendation would come ahead of the planned summit between regional leaders and U.S. President Barack Obama scheduled for later this year in Washington.

“What we do know is that we have to do it quickly. We anticipate that our engagement with the president of the United States should be around the third or fourth quarter and …therefore we do not have the luxury of time with studies that will take us through a very long and drawn out process,” Manning said, noting that there were other studies that were also available to the regional leaders.

Trinidad and Tobago, which is now examining establishing an economic and political union with the OECS by 2013, has also created a fund to assist disadvantaged economies in the region.

But Manning admitted that while Port of Spain had made available 79 million dollars to the fund last year, the downturn in the global economy had severely affected its ability to match that contribution this year,

He said the plan was to consolidate the fund and provide capital totaling 80 million dollars next year, ensuring that such a commitment would allow the region “to leverage on other countries in the world that wish us well”.

 
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