BRIDGETOWN, Barbados, Thursday February 19, 2015, CMC – Caribbean countries recorded “modest” economic growth last year even as the region recorded its fourth consecutive year of economic recovery following the global crisis that had seriously affected their socio-economic development.
President of the Barbados-based Caribbean Development Bank (CDB), Dr. William Warren Smith, told regional journalists Wednesday that last year, the region’s premier financial institution continued its efforts to help borrowing member countries keep growing their economies.
“Sustained economic growth is important because it has the potential to improve the lives of the more than 16 million men, women, and children living in our region,” he said, adding that “economic recovery, although still at a modest pace, continued for the fourth consecutive year in the Caribbean.
“Policy-makers sought to overcome the legacy effects of the great recession, and the setbacks associated with weak commodity prices. Issues of adjustment, competitiveness, resilience and access to finance for investment dominated policy discussions throughout the year. “
Smith said that in 2015 and beyond the policy agenda of regional countries must be to provide for a redoubling of the efforts to grow their economies and create jobs.
“This is the only way I know that we can enable our people to lift themselves out of poverty. Most countries in the region are now on a growth path, but still far below the level needed to be considered sustainable and to yield real benefits.”
He said reducing extreme poverty and addressing other development challenges facing the region can only be achieved through collaboration and partnership.
“Our bank has a broad development mandate and is well-placed as a focal point for dialogue, intermediation and extended partnerships on behalf of BMCs (borrowing member countries),” he said, noting that this is demonstrated in many ways.
Smith said in 2014, many development partners coalesced around the common objective of optimising the region’s renewable energy potential.
He said some key partnerships in this area included working with Germany supporting the establishment of the new Renewable Energy/Energy Efficiency Unit and its continuing technical assistance to build the Unit’s capacity and the Japan International Cooperation Agency and the Inter-American Development Bank for the financing of renewable energy and energy efficiency in the Eastern Caribbean, with special focus on geothermal development.
In addition, a new Sustainable Energy for the Eastern Caribbean Programme is being designed as a multi-donor trust fund to benefit member countries of the Organisation of Eastern Caribbean States. Initially, the resources will include grants from European Union-Caribbean Investment Facility, and the United Kingdom’s Department for International Development as well as loan funds from CDB.
Smith said CDB will intensify its efforts in 2015 to meet the needs of the Caribbean region, noting that since the inception of the Basic Needs Trust Fund (BNTF) 35, years ago, more than US$300 million had been spent on projects benefiting 2.6 million people living in the poorest Caribbean communities.
H said the Board of Directors recently approved US$10 million from the Special Development Fund for the eighth cycle of the BNTF.
“Key emphases of BNTF 8 will be greater access to quality education; human resource development; water and sanitation; basic community access, and drainage enhancement in low-income, vulnerable communities,” he said.
Smith said that last year, the bank, whose Standard and Poor’s (S&P) rating moved from “negative” to “stable” and affirmed its “double A” status on its foreign currency ratings, recorded a 61 per cent increase in loan approvals to US$270 million from US$167 million “thus providing financing for more development projects in 2014 than in 2013.
He said there continued to be growing cconcerns about a food import bill exceeding four billion US dollars annually across the region prompting renewed interest in promoting regional food security by revitalising agriculture.
He said this concern underpinned the bank’s approval of a US$1.2 million grant to examine the scope for developing a viable cassava industry.
The project, to be executed by the Food and Agriculture Organisation (FAO) of the United Nations, will include the identification, validation, and demonstration of improved cassava varieties and production systems. Cassava is a very versatile crop, which can also be used for the production of a range of other products.
Smith said that consistent with the high priority accorded to putting economic growth onto a sustainable path, Guyana was the beneficiary of an eight million US dollar loan to improve sugarcane yields and sugar production.
“Although not as dominant as it was in the past, the sugar industry still contributes around five per cent of GDP (gross domestic product), is Guyana’s third largest foreign exchange earner; and, in 2013, directly employed around 16,000 people,” he told regional journalists.
The CDB president said that infrastructure development also featured prominently in the bank’s 2014 portfolio, with approval of 18 new interventions in the area of economic infrastructure. These interventions covered the transportation, water, and sanitation sectors.
In the energy sector, Smith said substantial investments are required to replace obsolete and inefficient generation, transmission and distribution plant over the next five years and to exploit the region’s vast renewable energy potential.
“Renewable energy and energy efficiency are key areas of focus for CDB because of their potential for transforming the Caribbean,” he said, noting that the Renewable Energy/Energy Efficiency Unit, established in 2014, has been working to build and strengthen new partnerships and to mainstream renewable energy and energy efficiency across the Bank’s operations.
Last year, the CDB also approved a new Energy Sector Policy and Strategy, with three objectives, namely to assist BMCs with the timely provision of adequate, affordable, reliable, and clean energy services to all segments of the society; establish the energy sector as a dynamic economic sub-sector focused on a green energy industry; and to confirm CDB as a key financier for the energy sector, acting as a catalyst for attracting concessional resources to the Region.
“During the year, we emphasised the adoption of renewable energy and energy efficiency solutions in small and medium-sized businesses. These were financed by lines of credit intermediated through the development finance institutions in Dominica, Belize, and Jamaica.”
He said that CDB approved a US$22 million loan to Suriname for technical and vocational education and a US$16 million loan for the transformation of the College of The Bahamas.
“It is noteworthy that both projects include funding for renewable energy and energy efficiency enhancements,” Smith said, noting that the CDB had also placed strong emphasis on building resilience to natural hazards.
“This emphasis recognises the region’s extreme vulnerability, not only to economic, but also to weather-related shocks. The studies suggest that there is a 10-24 per cent probability of our region being hit each year by a natural disaster. The estimated economic damage is around one per cent of GDP.”
Smith said last year, the CDB provided funds for fiscal and debt sustainability projects in Grenada, Jamaica and for energy sector development in Trinidad and Tobago.