The year has come to an end in the Caricom part of the wider region with the IMF giving approval to Jamaica’s efforts at implementation of its Extended Fund Arrangement which had been laboriously finalized over a prolonged period that saw the electoral defeat of the Jamaica Labour Party Government led by Andrew Holness, and the assumption of office by the People’s National Party led by Portia Simpson, subsequently elected in December of 2011. Few in Jamaica could boast of this as great achievement, given the depths of the policy commitments that the government has had to undertake. And it is most likely the case that the wider population of the country has seen this agreement as one more in a trail of previous agreements which have brought little comfort to the man in the street.
Economic growth in Jamaica has been projected by the IMF at under 1 per cent for the 2013-2014 period and, in its recent December review, has asserted that “risk to the programme remains high, including possible external shocks, weak confidence and anemic external demand, shortfalls in budget financing and revenue collection, and policy slippages.”
At the other end of the region in Barbados, surprising to many people, have been government revelations of serious deficiencies in that country’s economic system, including a rise in the debt-to-GDP ratio to75%, and an almost unprecedented, in the region, government commitment to the dismissal of at least 3000 public service workers, as part of a deep reduction in government expenditure. The country has experienced low economic growth for some time, particularly since the 2008, and following the economic recession in the North Atlantic countries on which Barbados’ tourism industry has substantially depended.
In the middle, so to speak, of the Caricom region, have been the OECS countries, a fair number of which have also been battling with high debt to GDP ratios, and extensive deficits in government revenue. The meagre performance, influenced by obviously unsustainable public expenditure, of the Leeward Islands (Antigua, St Kitts & Nevis and Anguilla in particular) has highlighted their predicament, as well as the potential predicament of other OECS states.
Grenada, with a change of government in February of this year, has proceeded to take measures to stabilize public expenditure in particular. Similarly, in St Lucia, Prime Minister Kenny Anthony, in his May 2013 Budget presentation, decided to accept a recommendation of the implementation of a 15% VAT rate which, for some years, the IMF had been pleading with the previous government of Prime Minister Stephenson King to implement. But that measure has been met by some amount of public unpopularity, including substantial elements of the private sector.
In the region, over the year, Trinidad & Tobago, with its energy resources, particularly those of natural gas, has appeared to withstand the financial predicaments facing other states, and in some respects, has become a kind of lender of last resort for the other states. Yet, the country has limped along with a .2 per cent growth rate in 2012. So while Trinidad remains something of a benefactor to others in the region, its own performance does not suggest it as an example of implementation of policy measures that can lead to any substantial level of growth.
That Guyana, Suriname, Belize are, like Trinidad & Tobago, substantial producers of commodities in global demand, has allowed them to show higher levels of economic growth than the other states which we have drawn attention to. But in reality, apart from Trinidad & Tobago, the nature of their productive activity is such that they are not really seen as enhancing the possibilities for economic growth in the wider Caricom at present, though there is consistent talk about the potential for regional investment in agriculture in Guyana, a possibility which some Trinidad entrepreneurs now appear to be taking more seriously than in the past.
As the new year, and successive years go on, the possibility of collective economic activity within some geographical sectors in Caricom, Guyana and Trinidad & Tobago for example, promises to be a profitable possibility for regional economic integration, usually described as regional production integration, that can reduce the substantial pessimism now evident in Caricom about the utility of Caricom as an integration system.
In that regard too, it would appear that the very intense difficulties being experienced among states in the OECS sub-region, are beginning to induce more collective planning among its member states, an initiative which would appear to be induced by an activist approach by the Eastern Caribbean Central Bank (ECCB) towards ensuring a stabilization of the economic systems of the member states
This, in itself, results from the fact that as the countries use a single, collective currency ‒ the Eastern Caribbean dollar ‒ and maintain a collective system of reserves, the international financial institutions are increasingly prone to involve the ECCB in discussions and planning about the growth possibilities of the individual countries, as well as about a collective approach to the use of assistance intended for enhancement of the financial and planning capabilities of that regional sub-system.
Regionalism would, in that sense, appear to have been reinforced among those member states in the face of the difficulties which each individually faces. And to that extent the economic crisis that has enveloped them would appear to have enhanced active cooperation, a fact which, in the eyes of the international institutions enhances a systematic approach to facing the difficulties emanating from the global recession, while supporting tendencies towards closer sub-regional planning.
It would also seem to be the case that, in the course of this year and in the face of the difficulties faced by individual countries within the region, a certain amount of pessimism about the regional integration process itself has developed. Caricom heads of state and government would appear to have seen the necessity to counter this pessimism and this has been evident in their decision, in September of this year, to establish a Caricom Commission on the Economy. But in some quarters doubt lingers as to whether the heads are serious, after their earlier decision, in June of 2011 favouring what they described as a “pause” in their pursuit of the Caricom single economy.
Year 2014 will surely indicate whether the heads’ decision on the Caricom Commission is being taken seriously, or whether it was a just another decision designed to plug a hole of increasing doubt among Caricom citizens about the extent of their own seriousness.
