President Bharrat Jagdeo has said that the region now faces a situation of a creeping debt problem that has become a major issue and without solving this there could be no medium-term developmental strategy.

President Jagdeo has also observed that while the global financial crisis has had a significant negative impact on the region and has created a number of challenges, it has also exposed a trend that has existed in the Caribbean for a long time with its decline in terms of competitiveness and productivity, the Government Information Agency (GINA) reported yesterday.

Jagdeo  was speaking with the media prior to the commencement of the plenary sessions of the 31st  meeting of the Conference of Heads of Government of the Caribbean Community being held in Montego Bay, Jamaica.

He noted that the region now faces a situation of a creeping debt problem that has become a major issue, and while the region is not faced with a ‘doom and gloom’ scenario, there must be realistic analyses of the current situation.

When a country uses 60 to 75 percent of its revenue to service debt and then another 30 percent to pay wages and salaries, how could it then focus on development, Jagdeo queried.

“We have dealt with a similar situation in Guyana where 94 percent of revenue was used to service debt,” he is quoted by GINA as saying. He added that today his government has brought it down to 4 percent.

He said too that the Guyana overhang was 750 percent of Gross Domestic Product (GDP), an overhang which has been brought down to 40 percent of GDP.

Therefore, Jagdeo contended, it could be done through a dedicated campaign to tackle the problem.

He said the Guyana campaign focused first on getting qualified as a Highly Indebted Poor Country (HIPC) which he said obviously should be followed by a menu approach which involved buy-backs, write offs, getting rid of commercial debt, refinancing debt, and a whole range of options which must be explored by the region in great detail, rather than just being left to Ministers of Finance to solve.

Meanwhile, President Jagdeo heads a special task force set up by CARICOM to assess the financial crisis and come up with solutions.

Jagdeo referred to talk of the European Union (EU) cutting back on aid to developing countries, and declared that it is of concern to the region given what is happening in Europe now with almost 15 countries introducing austerity measures at a time when there is need for bolstered global demand.

He said disposable income being available to citizens of developed countries is important to the region, since it allows them to travel for tourism and other purposes.

His fear, he said, is that there exists a flat situation in terms of global demand which will delay a return to prosperity for countries including those in the Caribbean.

He argued too that the prosperity of the region is linked to the personal development of citizens and posited that anything that focuses on women and children has to be good.

“In Guyana we have a programme recently launched for single parents.” This was undertaken by government in collaboration with the Guyana Bank for Trade and Industry (GBTI) by removing the corporate tax on any income on loans secured by single parents and in exchange the bank has dropped the interest rate low enough for many to access loans.

Observing that there are many single parent-headed households in the region, he urged governments to ensure that the offspring of such households must have hope of prosperity.

Jagdeo said his government will support anything to do with the development of women and children, GINA reported.