Caribbean leaders want reform of int’l finance system

KINGSTON, Jamaica, September 25, 2008 – Jamaica’s Prime Minister Bruce Golding says the restructuring of the international financial system must move ahead more urgently, and he’s getting support in his call from one other Caribbean leader.

Mr Golding has insisted that reform is necessary to ensure that more focus is given to countries like his which, although regarded as middle-income, are still challenged by poverty. He noted that while the emphasis is on poor countries, like those in Sub-Saharan Africa where there is intense poverty, leaders of the world economy seem not to acknowledge that 41 per cent of the poor live in middle income countries like Jamaica.

“We can’t talk about tackling poverty if you exclude the target group that you are trying to alleviate”, he said.

His sentiments were shared by Guyana’s President Bharrat Jagdeo who told the ongoing 63rd United Nations General Assembly that progress in reforming multilateral institutions, like the International Monetary Fund (IMF) and World Bank, has been slow and the results few and far between.

He reiterated that limitations in the mandate and functioning of these institutions were a contributory factor to the current financial crisis and suggested that the mandate of the IMF explicitly be the preservation of systematic financial stability as a global public good.   

“In addition, the use of passive surveillance as a general instrument, and conditionality-based lending among the more vulnerable members, has clearly proven to be ineffective,” President Jagdeo argued.

“This is so not least because the incentives associated with conditionality-based lending are almost invariably never applicable to countries of systematic importance and there exist no mechanisms to encourage larger countries to be responsive to policy advice.”

He further suggested that the World Bank have a revised mandate that focuses on certain key development challenges, such as protection of the environment, clean energy, and certain aspects of poverty reduction, instead of attempting to address every development challenge and undermining its own effectiveness.

“In addition, more needs to be done to democratise the institutions, align the interests of the management and staff with those of the countries they serve, and make them more accountable to the membership,” the Guyanese leader emphasised.

Prime Minister Golding further expressed concern that the multilateral financial system does not have enough built-in signals to warn of danger ahead. He said the response mechanism seems to be isolated and disconnected.

“Something needs to be done. The world economy can’t be managed on this roller coaster approach”, Mr Golding said.

The Jamaica Prime Minister will address the General Assembly tomorrow.