The Caribbean Community (CARICOM) has appealed to the international community to support the Region’s call for the immediate review of the criteria used by multilateral financial institutions (MFIs) and some development partners to graduate small highly indebted middle income countries (SHIMICS) from access to concessional resources.
The appeal was issued by Hon. Kamla Persad-Bissessar, Prime Minister of Trinidad and Tobago and Chair of the Conference of Heads of Government of the CARICOM when she addressed the 68th Session of the United Nations General Assembly in New York on Wednesday.
Prime Minster Persad-Bissessar also called for an early review of the economic and financial situation of graduated SHIMICS, so that programmes could be developed for the orderly resolution of their debt overhang, without compromising their future growth prospects.
The Prime Minister’s comments were made against the background of the debilitating debt burden and the use of per capita income to determine a country’s level of development and its need for grant and concessional financing. The Community has contended that the use of the per capita measurement does not provide the true picture.
Per capita income, Prime Minister Persad-Bissessar argued, was at best an arithmetic ratio that did not address levels of poverty, distribution of income, levels of indebtedness, vulnerability and the capacity to self-generate sustainable economic and social development.
“…as Chair of the Conference of Heads of Government of the Caribbean Community (CARICOM), I wish to bring to the attention of this august body, a matter of significant concern to the Member States of CARICOM, that of Small Highly Indebted Middle Income Countries (SHIMICs). Almost as if we are being penalized for our relative success in getting ourselves out of the morass of poverty, the Member States of CARICOM that are categorized as middle income countries, have been graduated out of the economic space where they were previously afforded access to concessional financing,” the Prime Minister told the General Assembly.
She added that if the impact of natural disasters and the deleterious effect of sea-level rise and climate change were added, “the fallacy of the middle income categorization can be wiped out in an instant”.
The Chair of the Community posited that the issue had to be considered within the context of Small Island Developing States (SIDS) and the Post-2015 Development Agenda.
“Indeed in the preparations for our participation in that upcoming discourse, the recognition of the vulnerabilities of small island developing states is one of the guidelines that CARICOM will apply when considering its commitments to the overall Agenda. The economic vulnerability and ability of the Member States of CARICOM to build resilience are exacerbated by a debilitating debt overhang which continues to bedevil the Region’s growth and development prospects,” the Prime Minister said.
The Community’s stock of debt stands at about US$19B. The debt to GDP ratio ranges from 60 to 144 per cent for many States.
In seeking the support of the international community, Prime Minister Persad-Bissessar said: “It must be acknowledged that the debt overhang did not result from profligate spending by CARICOM Governments, but resulted from the geographical make-up of our countries; our proneness to natural catastrophes; our very small physical size which does not lessen the per capita cost of development expenditures for necessary economic infrastructure and necessary social development projects.”