CARICOM Heads to tackle de-risking, Brexit

GEORGETOWN, Guyana -- When Caribbean Community (CARICOM) heads of government meet in Georgetown, Guyana, next week, they will do so against the background of a number of threats to the region’s financial and economic stability.

Chief among these are the threats posed by international banks limiting or terminating their relationships with regional financial institutions, and the yet to be determined implications of the British decision to leave the European Union (EU), a key partner in the Community’s development. The Brexit vote has sent Britain and the rest of the world into a tailspin. The pound sterling fell in value to the lowest in 30 years, and international financial markets took a downturn, as the implications hit home.

The Caribbean is not immune from the potential fallout, and economists and politicians alike are assessing the situation. The majority of CARICOM member states were former colonies of Britain, which was a key ally of the region within the EU.

While some have adopted a wait and see stance, confident that any domino effect will not occur in the short-term, others are predicting immediate consequences and want the CARICOM member states to appreciate the value of regional integration and band firmly together to chart the way forward.

The concerns range from a drop off in arrivals in tourist dependent member states such as Saint Lucia and Barbados where the UK is a major source market, a decrease in development assistance, to effects on trade agreements the region has with the EU.

Talking with journalists in Guyana last weekend, CARICOM secretary-general, Irwin LaRocque, said that though the breakaway was not on the agenda of the meeting, it would undoubtedly be discussed next Tuesday and Wednesday in Georgetown.

“We have to, of course, be concerned because the United Kingdom is a significant player in the arrangements in the European Union in terms of a voice, that also being a Commonwealth country but a voice as well in the European Union and the fact that it is a significant contributor to the European Union and of course the budget of the European Development Fund,” the secretary-general said last Saturday.

Pointing to the strength of CARICOM’s relations with both Britain and the 28-member EU, the secretary-general said he did not anticipate any “diminishing of the relationship with the United Kingdom or with the European Union in any way at all”.

Assessing the situation shortly after the vote, the head of the delegation of the EU to the Eastern Caribbean Countries, OECS and CARICOM/CARIFORUM, Ambassador Mikael Barfod, acknowledged that there could be some consequences for the Caribbean, such as renegotiations of trade deals with the United Kingdom. Barfod noted that the UK was a major trading partner for many CARICOM member states.

Correspondent Banking

From prime ministers, many of whom are their countries’ finance ministers, to the heads of regional banking institutions, the assessment of de-risking scenario is that it is unfair and the predictions about its impact on the region are dire, and the call to action is extremely urgent.

De-risking is international banks’ withdrawal from their relationships with indigenous banks because of fears of money laundering and questionable sources of funds which would cause the international banks to receive heavy fines from their regulators.

Regional banking institutions rely on such relationships in order to allow residents to conduct international financial transactions. The issue has been occupying the attention of regional policy-makers, following signals by international banks that they are unwilling to continue carrying the business of regional banks.

Transfers of remittances, cheque payments, international trade and the facilitation of credit card settlements for local clients are among the areas that have been affected by de-risking.

“If you want to take it to the extreme, you and I will not be able to shop in a supermarket because the supermarket will not be importing the stuff we like to buy,” deputy governor of the Eastern Caribbean Central Bank (ECCB), Trevor Brathwaite said recently. “You and I will not even be able to buy shoes and clothes … cars, tyres and parts.”

The Caribbean Development Bank (CDB) quoted a November World Bank survey as saying that about 75 percent of international banks have experienced a reduction in correspondent banking services, with the Caribbean being the worst affected.

Reports are that eight financial institutions in Barbados, about seven in Jamaica and five in Belize and others in Antigua and Barbuda, Montserrat and other member states have been affected by a termination of or restriction in correspondent banking relationship.

The heads of government, at their intersessional meeting held in February, decided to establish a high level advocacy team headed by Antigua and Barbuda prime minister, Gaston Browne. Browne’s mission is to represent the Community’s interest at all levels, including with the United Nations, the World Trade Organisation (WTO), and the United States Congress. A meeting has since been held with US Treasury and State Department officials in April 2016 and the matter was also discussed with the UK foreign secretary.

A report on the UN-Caribbean Public-Private Dialogue on Correspondent Banking held in Jamaica, also in April, was presented to the meeting of the Council for Trade and Economic Development (COTED) held in Georgetown later in the month. the public-private dialogue brought together bankers in both the onshore and offshore sectors from the US and the Caribbean, as well as central bankers and government officials from both parties.

Trade ministers at the COTED meeting reiterated that the correspondent banking issue was a troubling one that was not limited to pure banking, but had trade and economic implications, and had the potential to lead to an upsurge in illegalities. They also underscored that the threat was being made even as all CARICOM member states were compliant with all international financial regulations. The ministers agreed that a comprehensive consistent and diplomatic offensive should be launched.

The trade ministers also supported a declaration of the Permanent Council of the Organisation of American States (OAS) that was tabled for adoption 30 March 2016 at a special meeting summoned by the then chair of the Permanent Council, Ambassador Sir Ronald Sanders. The declaration addressed the severe threat posed by the severing of correspondent banking relationships to the economic growth, social development and political stability of small economies.

The declaration also called for urgent action to ensure that banking regulations designed to foster transparency and accountability and prevent money laundering and terrorism financing do not create financial exclusion and economic decline of small economies by cutting off their access to international correspondent banking.

The heads know that there will be no easy solution to this matter.

One solution proffered by Prime Minister Dean Barrow of Belize was the pooling of business to achieve “critical mass” and to make it worthwhile for the correspondent banks that are weighing risks and returns. The governors of regional central banks, and the committee of ministers of finance on correspondent banking, that the heads of government have established, will consider the modalities of that recommendation.

Further action on correspondent banking will be determined by the reports presented to the heads of government during the two-day conference.

Border Issues

Heads will consider the border issues between Guyana and Venezuela, and Belize and Guatemala. The Community has consistently expressed it full commitment to the preservation of the territorial integrity of all member states.

Belize-Guatemala: Guatemala has had a longstanding claim to Belize dating back to the 18th century. At the center of Guatemala’s claim is the 1859 treaty between Britain and Guatemala. From Britain’s viewpoint, this treaty merely settled the boundaries of an area already under British dominion.

In November 2000, the heads of the delegations of Belize and Guatemala signed an agreement to adopt a comprehensive set of “confidence-building measures to avoid incidents between the two countries.

The OAS-mediated agreement seeks to resolve by peaceful means and through a specific agenda of measures to be implemented, a territorial differendum that originated two centuries ago between Britain and Spain over their colonial territories in Central America

CARICOM heads of government have encouraged both Belize and Guatemala to continue their efforts at constructive engagement and the building of friendly relations for the betterment of their peoples.

At their 27th inter-sessional meeting, in Belize in February 2016, heads of government “recognized the important role of the Organization of American States (OAS) in support of the efforts of the Belize and Guatemala governments to secure lasting peace and development. They “called on the international community to support the efforts of these two countries, and to be especially generous in their support for the sustained involvement of the OAS in these efforts”.

The heads “reaffirmed their unequivocal support for the maintenance and preservation of Belize’s sovereignity and territorial integrity”.

Guyana’s border controversy with its western neighbour Venezuela, relates to the more than a century-old dispute, which arose as a result of Venezuela’s contention that the Arbitral Award of 1899 is null and void. (The 1899 Award had conclusively settled the boundary between the two countries.)

Guyana’s pursuit over the years for a peaceful settlement has yielded mixed results. A founding member of the 43-year old integration movement, many of its diplomatic interventions have rested on the pillar of foreign policy coordination, one of five pillars which underpins CARICOM integration.

In its more recent act of aggression, Venezuela on 6 July 2015 announced presidential decree 1859, which lays claim to all the Atlantic waters off the Essequibo coast. This effectively reversed the 1899 agreement that settled the border dispute.

In response, CARICOM reiterated its position of “total support for the integrity of Guyana’s territory and maritime space, as well as that of all CARICOM states”, even as it emphasised the need to maintain peace and stability as the basis for enhancing regional cooperation and development for both these countries.

Speaking at the 36th regular meeting of the conference, in Barbados, in July 2015, then chair of the Community, Freundel Stewart, prime minister of Barbados stated –

“We [CARICOM] are committed to assisting Venezuela and Guyana in this dispute, preferring at all times a peaceful solution… But as of now, having regard to the fact that there was an arbitral award in 1899 and having regard to the fact that the Geneva Agreement of 1966 has not yielded the kind of results that either Venezuela or Guyana expected, CARICOM’s formal position has to be a commitment to the territorial integrity of Guyana,” he said.

At their 27th inter-sessional meeting in Belize, in February this year, heads of government “reaffirmed their unequivocal support for the maintenance and preservation of Guyana’s sovereignty and territorial integrity”. They also expressed their “full support for the role of the United Nations secretary-general and his efforts, in keeping with the provisions of the Geneva Agreement, to bring the controversy to a definitive and judicious conclusion”.

Plight of Persons of Haitian Descent rendered Stateless in DR

Heads will revisit this long standing, unresolved matter, as CARICOM continues to advocate for a resolution to the crisis which makes approximately 250,000 Dominicans of Haitian descent and Haitian migrants in the Dominican Republic stateless.

A 2013 Constitutional ruling by the Dominican Republic (DR) Government effectively renders stateless anyone with foreign ancestry born in 1929 or later. The international community’s response to this decision, established as the largest case of statelessness in the Western hemisphere, resulted in the DR Government instituting a regularisation system to enable Dominican Haitians and Haitian migrants to register and to be issued with identification cards.

The 17 June 2015 deadline set for this process was not met by many Dominicans of Haitian descent and Haitian migrants. This was due mainly to their inability to raise the required fees as well as the difficulty in acquiring the necessary documents which in many cases did not exist, such as ID cards that were confiscated by authorities. As a result, the DR government has indicated it will begin deporting non-registered migrants. “Up to 250,000 people are at risk of being deported to a country where many of them have no family members, no job prospects and no current ties.”

CARICOM has firmly “called out” the Dominican Republic for its treatment of Dominicans of Haitian descent and Haitian migrants in the recent immigration crackdown at the end of the June 2015 deadline. In a statement issued at the conclusion of the 36th regular meeting of heads of government, Stuart strongly indicated CARICOM’s condemnation of behaviour that enshrined “barbarity into the constitutional practices of the Dominican Republic”.

In June 2015, at the high-level dialogue between the European Union and the Caribbean Forum of African, Pacific and Caribbean (ACP) States, the Dominican Republic representatives had agreed that their country would undertake a new approach. The CARICOM statement also expressed concern about this breach.

At their 27th inter-sessional meeting in February, in Belize, heads “expressed concern at the continuing grave human rights situation of Dominicans of Haitian descent threatened by statelessness and the precarious humanitarian situation of undocumented Haitians in the Dominican Republic who have been deported to Haiti”. They concurred that “the human rights situation… must form part of the agenda of the CARIFORUM-EU policy or political dialogue.

In its advocacy process at every level, CARICOM has invoked the assistance of the United Nations, particularly its human rights agencies, as well as the OAS to help resolve this matter In July 2015, LaRocque also raised this issue when he accepted the credentials of Archbishop Nicola Girasoli, Plenipotentiary Representative of the Holy See, on the occasion of the establishment of diplomatic relations between CARICOM and the Vatican, in July 2015.

Courtesy: Caribbean News Now

Jamaica is T&T's ATM - Mahfood slams one-way CARICOM benefits

"Jamaica has been the ATM for Trinidad and Tobago."

That's the claim from the Private Sector Organisation of Jamaica (PSOJ), which has indicated that it wants Jamaica to use the upcoming Caribbean Community (CARICOM) Heads of Government Summit to push forcefully for changes that will "rebalance trading relationships" in the 15-member group.

William Mahfood, the PSOJ president who has made the claim, was referencing a comment made by former Trinidad and Tobago prime minister, Kamla Persad-Bissessar, who in 2010 at a similar event in Jamaica, controversially declared that her country was not an "ATM machine for the Caribbean".

"Jamaica, without us even realising it, for many, many years has been the ATM for Trinidad. What exists now in CARICOM is a one-way street. We have an influx of goods coming from Trinidad. Trinidad, at this point in time is the only beneficiary of CARICOM," he argued.

Mahfood said CARICOM should be moving at a better pace towards integration similar to the European Union (EU), now in crisis over the decision of Britain to exit the union.

The EU citizens and businesses can travel freely throughout member states with little restrictions.


"If CARICOM were to operate in the same way, what that would mean is that where there are competitive advantages, like in Trinidad, for oil, gas and energy, manufacturers could have a base there, but it could be staffed by Jamaican or Guyanese labourers," Mahfood argued.

"If that doesn't happen, then there is a lot of the CSME intention [that is] really not worthwhile," he said.

The issue of trade, especially by Jamaican businesses, has put a strain over the years on relationships between Kingston and Port-of-Spain. There has also been the long-running matter relating to immigration.

Jamaican businesses have also complained about the alleged disadvantage they face with Trinidad and Tobago under the Common External Tariff (CET), which is an agreed tax by members of the union on imports of a product from outside the union.

"Under the Common External Tariff, it allowed Trinidad, which produces petroleum products, to export their petroleum to Jamaica at a premium. We estimated that it cost Jamaica over the last 10 years more than $8 billion," Mahfood said, explaining that there has been a push for the CET's removal or the inclusion of tax on petroleum from Trinidad.

Mahfood claims that a change would ensure that all products are priced to compete at the same level.

No Jamaican businesses have brought a case to the Caribbean Court of Justice (CCJ) testing the issues under the Revised Treaty of Chaguaramas which governs CARICOM and the CSME.

Meanwhile, head of the Jamaica Manufacturers' Association, Metry Seaga, believes that Jamaican businesses should shoulder some of the blame for some of the trade imbalances that persist in the region.

"We have not done a good enough job in utilising the available options to us. Countries like Trinidad and Tobago have used them very well. We have played by the letter of the law," he said, adding that he believes in the CSME and CARICOM.

"We have not pushed the envelope. For example, we have allowed Trinidad and Tobago to sell us oil at an inflated price because of the benefit of the CET. We have known about [it] and we have been silent about [it] for the last 10 years."

According to Seaga, Jamaican businesses have options of pursuing strong negotiations, registering a complaint with the Council for Trade and Economic Development or taking cases to the CCJ.

Data from the Statistical Institute of Jamaica show that Jamaica's trade deficit with the CARICOM declined by almost a fifth in the first 10 months of last year.

Up to October last year, the deficit was US$480 million.

STATIN says the deficit fell because of lower prices of fuel imported from Trinidad and Tobago.

Meanwhile, exports to the countries of the regional group also fell by 40 per cent to US$45 million.

Courtesy: Jamaica Gleaner

CARILEC Launches Renewable Energy Community to Drive Regional Collaboration

June 29, 2016, CASTRIES: This morning, the Caribbean Electricity Utility Services Corporation (CARILEC) launched a renewable energy virtual community for utility engineers and energy practitioners called the CARILEC Renewable Energy Community (CAREC).

The community features informative documents and training materials, monthly technical webinars and a real-time discussion board. The online platform enables members to connect with peers, learn from each other and resolve renewable energy challenges in an environment of collaboration. Global and regional energy experts will host monthly webinar series and contribute to CAREC discussions on a regular basis.

“I am thrilled to see CAREC being launched today. We know that this online community is an excellent resource not only for CARILEC members but also for regional energy professionals. We encourage energy stakeholders to use this platform and promote discourse in many energy issues, as we believe that online collaboration is a great way to help increase general knowledge and capacity in our collective move towards sustainable energy practices,” said Mr. Thomas Hodge, Executive Director of CARILEC.

The need for a regional community for island energy professionals to exchange knowledge was a key theme at the 2015 Aruba Learning Event. Since then, a team from CARILEC, the Clinton Climate Initiative (CCI), Rocky Mountain Institute and Carbon War Room (RMI-CWR) and the International Renewable Energy Agency (IRENA) have supported CAREC implementation efforts. CAREC will be co-managed by the current CARILEC training manager, Lauren Primus and a project manager from CCI, Martyn Forde.

To request CAREC membership access visit the CARILEC website or type into your browser. Funding for CAREC was made possible by a generous grant from the Global Environment Facility (GEF) through the United Nations Development Programme and the Government of Norway.

For press, contact: This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it.
To learn more about the Community, contact: This email address is being protected from spambots. You need JavaScript enabled to view it.

Jamaica tourism officials take steps to secure UK market in light of Brexit

The United Kingdom’s vote to leave the European Union (EU) is significant to Jamaica’s tourism industry, Tourism Minister Edmund Bartlett says, but there’s no need to panic as every effort will be made to secure the UK market.

Last Thursday, in a referendum on Britain’s exit (Brexit) from the EU, the United Kingdom voted to leave the 28-member bloc.

Bartlett told the media over the weekend that the decision “is of significance to us in tourism for a number of reasons, perhaps, foremost of which is the fact that, based on the economic and political implications, it will have an impact on the travel and tourism community across the region.”

He noted that the Caribbean was most dependent on British visitors on this side of the globe and “it is important for us to consider what implications that will have on the flow of visitors into our destinations.”

“For us in Jamaica, the British market is our third largest and is a growing market and with it comes also important connectivity from other areas of Europe, so that whatever is happening in that economy, in that political space, is of tremendous interest and importance to us,” Bartlett noted.

He gave the assurance that proactive steps were being taken to secure the UK market, but said it was recognized that the immediate short-term impact was the devaluation of the British pound in the wake of the Brexit vote.

This, the minister noetd, had implications for British travellers and their ability to afford visits to the Caribbean and Jamaica, “especially against the background that our prices are predicated on the US dollar.”

On a positive note, he suggested that the immediate impact on arrivals for Jamaica “may not be severe at all.”

“Our immediate market arrangements are covered by a series of packaging which have taken place already; payment for which have either been in the system already or are about to be made,” he explained.

However, Minister Bartlett said Jamaica had to look beyond the next winter season.

“As a result I will be leading a team to the UK in September for the Jamaica Travel Market and thereafter to do a roadshow in the British Isle,” he said, stressing that this is important to shore up partnerships in the area and bolster the country’s market position in relation to the type of products, pricing and general arrangements that will be made “to ensure the competitiveness of destination Jamaica.”

“We are always proactive and, interestingly, our programme for the UK in fact predates the results of the UK’s referendum. So we will continue to monitor the situation and take additional steps as required,” the tourism minister added.

Courtesy: Caribbean 360

UK's exit from EU a threat to the Caribbean, warns region's top academic

Vice-Chancellor of the University of the West Indies (UWI) Sir Hilary Beckles has warned the region to brace for the impact of the United Kingdom’s (UK) break with the European Union (EU), as he predicted that every aspect of life in the Caribbean will be negatively affected.

The Brexit (British exit) vote last Thursday has already caused ripples across the world, with the value of the pound falling and stock markets dipping among the immediate effects.

And Sir Hilary says the region’s fragile economic recovery is now under threat and Britain’s exit should trigger immediate strategic regional reactions, even before Heads of Government meet in Guyana for their July 4 to 6 Summit.

“The predictable, highly individualistic action poses both a short-term as well as a long-term threat to the performance of CARICOM economies,” he said in a statement issued yesterday.

“From trade relations to immigration, tourism to financial relations, and cultural engagements to foreign policy, there will be a significant redefinition and reshaping of CARICOM-United Kingdom engagements,” Sir Hilary further warned, as he urged CARICOM to use the development to deepen and strengthen its internal operations and external relations with the wider world.

“It’s a moment for CARICOM to come closer together rather than drift apart. The region should not be seen as mirroring this mentality of cultural and political insularity, but should reaffirm the importance of regionalism within the global context for the future.”

Sir Hilary said the UWI will host a symposium this week to discuss the implications for the Caribbean, with a view to facilitating regional action ahead of the meeting in Guyana.

“This UK development should not be taken lightly. It should be fully researched as it constitutes an obvious structural threat to the sustainability of economic institutions in the region,” he said.

The top UWI official argued that on reaching the limits of emotional despair over how to manage its post-imperial, ethnic nationalism, and challenged to participate in the global world as an equal partner, the English have retreated to their traditional identity base at the expense of every other consideration.

“It has taken this strategic step in order to go forward as old England versus the world. This is a desperate attempt to reinvent a still idealized past in which Englishness is celebrated as a distinct standard not to be entangled or diminished by deep association,” he said.

“Those driving the ‘Leave’ agenda knew very well the likelihood of broad-based negative global effects of their option, but chose to jettison external obligations, a critical feature of hyper-conservative, extreme nationalism.”

On the heels of the referendum, UK Prime Minister David Cameron announced that he would step down in October.

He had urged the country to vote “remain”, but that campaign was defeated 52 per cent to 48 per cent, although London, Scotland and Northern Ireland backed staying in.

However, Scotland’s First Minister Nicola Sturgeon has suggested the Scottish Parliament could be able to keep Britain from enacting the referendum decision if it withholds legislative consent.

Courtesy: Caribbean 360

Jamaica prepares to tap into climate change fund

Jamaica is preparing to tap into US$10.3 billion available to fund climate change adaptation and mitigation projects.

The country is joining 200 other developing states in formulating viable proposals to access financing from the Green Climate Fund (GCF).

Based in South Korea, the GCF was founded as a mechanism to assist developing countries in adaptation and mitigation practices to counter climate change.

Jamaica has, so far, submitted a proposal to the GCF for readiness financing amounting to US$300,000.

According to Principal Director of the Climate Change Division in the Ministry of Economic Growth and Job Creation, Albert Daley, this will assist with financing “to help to put in place the system and the procedures to enable the country to access funding, training, public awareness, and setting up the work programme.”

“We are hoping to get word from the GCF before the end of the month and if that happens, we will be well on our way with some funds to start put in place what we need to do to prepare ourselves to get proposals out, hopefully by early next year and thereafter,” he added.

Daley explained that “this is the preliminary funding necessary to help us get our house in order”.

The principal director said that while there are no time restrictions for submitting proposals, “those who are in the line first are most likely to get the funding that they need”, so Jamaica has to move swiftly to put the appropriate measures in place in order to access the funds available.

“So, we want to get in line very quickly and that is why we are very keen on having this workshop to sensitise our government agencies as to how they can contribute to the process of developing good projects,” he said.

Daley said it is expected that more funds will be made available over time to the GCF. It is anticipated that by 2020, at least US$100 billion will be available each year for climate financing.

“We want to be prepared to be able to access funding that’s available, not just from GCF but any other entity that has funding,” he said.

Courtesy: Caribbean 360

St Maarten to host CaribNOG 12

WILLEMSTAD, Curacao -- St Maarten will host the twelfth meeting of the Caribbean Network Operators Group (CaribNOG) from October 24 to 26. CaribNOG is the Caribbean’s first volunteer-based community of network engineers, computer security experts and tech aficionados.

The three-day gathering is part of a larger event called Internet Week SX, which continues until October 28.

The Internet Week is organised by CaribNOG, the Latin American and Caribbean Internet Registry (LACNIC), the Internet Society (ISOC) and the St Maarten telecommunications regulator (BTP).

The event dates were announced at the second Caribbean Peering and Interconnection Forum, held at the Renaissance Resort and Casino, Willemstad, Curacao from June 7 to 10.

“At the twelfth regional gathering of CaribNOG, we’re expecting a large turnout of network operators, telecommunications regulators, academics, Internet service providers, engineering and computer science students, special interest groups and government representatives, drawn from across the region and around the world,” said Bevil Wooding, one of founders of CaribNOG.

Wooding is also the Caribbean Outreach Manager of Packet Clearing House, a US-based non-profit firm that has worked closely with CaribNOG and the Caribbean Telecommunications Union, an inter-governmental organisation, to actively promote and support the growth of critical internet infrastructure across the Caribbean.

“CaribNOG 12 is being hosted in conjunction with a two-day event by LACNIC and ISOC, and that’s deliberate,” said Stephen Lee, CaribNOG’s program director. “The ongoing collaboration between regional Internet organisations is critical to increase regional awareness of Internet policy and related global developments.”

Kevon Swift, head of strategic relations and integration at LACNIC, said the collaboration between LACNIC and CaribNOG played a key role in enhancing the technical capacity of the region: “These types of meetings are important forums to tackle the technology issues affecting Latin America and the Caribbean.”

Courtesy: Caribbean News Now

IDB: Regional growth hampered by savings crisis

Latin America and the Caribbean faces a savings crisis, with fiscal and demographic realities making the outlook worse in the coming years, according to a new study by the Inter-American Development Bank (IDB) released here today.

The region faces major fiscal challenges in the years ahead and the report argues that more savings is a key element to ensure both economic growth and resilience.

The gross national saving rate in Latin America and the Caribbean was just 17.5 percent of GDP between 1980 and 2014, far below the 33.7 percent for Emerging Asia and 22.8 percent for advanced economies. Only sub-Saharan Africa saved less, at 13.8 percent.

The report analyzes the reasons behind the region’s chronically low savings by households and governments, and its economic impacts, from behavioural biases among individuals to structural inadequacies in financial systems and fiscal budgets. It also looks at inefficiencies in savings by firms, which invest too little.

On the upside, the book provides a roadmap for policymakers and other key actors to reverse the situation to bring savings rates more in line with successful economies. The IDB said even small gains in savings could have big impacts.

For instance, for every percentage point increase in national saving, domestic investment in the region increased by almost 0.4 percent. This means US$20 billion in more money available to finance vital infrastructure projects, the IDB said.

“We can’t just shrug off our poor savings rates by saying we are bad at putting money away,” said IDB Chief Economist José Juan Ruiz. “This book shows governments, businesses and even families have it within their power to ensure we have the resources we need during the bad times and the good times, and to care for an aging population.”

The book, Saving for Development: How Latin America and the Caribbean Can Save More and Better, is part of the IDB’s flagship Development In the Americas series. It lays out the big gaps in the savings system in the region.

It noted that pension systems are another savings constraint. Less than half the population in Latin America and the Caribbean saves for retirement through a contributory pension system, a problem that, unless corrected, will get worse as the population ages.

“The savings crisis means the region is struggling to find the resources needed to finance new and much-needed airports, ports, roads and other infrastructure that can boost future growth. The region must increase investment by between 2 and 4 percentage points of GDP per year (depending on the country) for decades to loosen this binding constraint to growth, or by between US$100 billion and US$200 billion a year,” the IDB said.

It added that fiscal policy has also impacted savings, noting that governments spend too much on current expenditures such as subsidies, and too little on capital investments. The IDB said that recent economic downturns have made this worse as governments have opted to cut investment spending.

“The agenda to get countries to save more can seem overwhelming, requiring us to act on many fronts,” said IDB lead economist Eduardo Cavallo, one of the book’s coordinators and editors. “It may seem more convenient to rely on foreigners to provide us with their surplus savings. The book shows this is not a viable option anymore. Saving more and better will allow us to stand on our own two feet, and provide resources for people to achieve their aspirations.”

Courtesy: Caribbean 360

Regional rum industry endorses call for action on cover-over subsidies

Representatives of the rum industry meeting in Jamaica recently have endorsed a call to action by Guyana’s President David Granger, for the region to use its diplomatic strength to help resolve the danger posed to the survival of the industry through the tax rebates passed on to rum producers in Puerto Rico and the United States Virgin Islands (USVI).

The US government makes annual payments to the two territories out of federal excise taxes. So, when rum is produced in either the USVI or Puerto Rico and then sold in the US, the federal excise tax on that rum is returned to its place of production.

According to President Granger, these cover-over subsidies pose an immediate threat to the long term viability of the rum industry, a sector of tremendous social and economic importance to Caribbean economies.

He said Caribbean countries stand to lose US$700 million per annum in export earnings and taxes, with up to 15,000 jobs being affected unless the situation is addressed. In the case of Guyana, he said, it was in the national interest to ensure survival and sustainability of the industry noting that the industry must be protected and preserved in the face of this peril.

Granger was speaking at the launch of the Demerara Distillers 50th Anniversary Edition Rum in Georgetown.

Speaking after the meeting, Chairman of the West Indies Rum and Spirits Producers’ Association (WIRSPA), Frank Ward, said producers “were very encouraged by the President’s statement”.

“The group is extremely concerned about the situation in the US market where some of our producers have already experienced significant losses,” he said.

“We believe this is the most significant threat ever faced by our industry and one most likely to impact on profitability and our ability to earn foreign exchange and maintain employment. Not only are we seeing the effects in the US market, but in other markets as well as the product moves around, which means that our producers will also face new disadvantages in these markets.”

Following discussions among producers in Jamaica, he said, WIRSPA hoped that the CARICOM Council for Trade and Economic Development (COTED) would address the matter again during their next meeting later in the year. He said WIRSPA stood ready to apprise them of the latest developments in the markets and to seek their continuing support.

Courtesy: Caribbean 360

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