BRIDGETOWN, Barbados, Thursday July 27, 2017 – Spiraling debt in some regional economies remains a major worry for the Caribbean Development Bank (CDB).
The Barbados-based institution has warned that the efforts of some countries to tackle the problem are off-track and Governments have to seriously assess their management of the problem.
According to Director of Economics at the CDB, Dr Justin Ram, Barbados is the most indebted country in the region and there are strong signs that the Trinidad and Tobago economy is headed for trouble.
“Although Barbados is at the top now, we have other countries there that are actually on the wrong trajectory. Trinidad and Tobago as well, I can say, their debt dynamics is on the wrong trajectory, and if things do not turn around there quickly then very soon they will have a debt-to-gross domestic product (GDP) ratio possibly in excess of 80 per cent of GDP,” he told the annual review seminar of the Central Bank of Barbados.
Ram stressed the problem needed fresh, urgent action and lamented that regional governments may not be following the right examples.
Highlighting experiences in Greece, Italy, Japan, Singapore, the United Kingdom and the United States he suggested the region should carefully study each case and take only the best practices.
“Greece, yes, [has] a primary balance now that is positive, but general government debt of 181 per cent, and what about the real GDP growth? It’s actually at zero,” Ram noted.
He also cited the experience in Singapore, but maintained it was not the best model for the region.
“When we look at some of the data, is it really what we want to emulate? A country that has a primary balance that is positive, yes, but I don’t think we really want to go down the route of having such high levels of debt-to-GDP, and I don’t think two per cent real economic growth would be sufficient for us here in the Caribbean,” the CDB official said.
He stressed that some of the best lessons of debt recovery were in the region, pointing to economic development in Jamaica and Grenada.
“I want to emphasize to you that the lessons learned from Jamaica, and perhaps Grenada, show us that we can turn things around if we take the right policy measures and the right policy steps,” Ram said.
He contended that now was the time for governments to seriously map out a new direction to take forward their economies.
“I would proffer to you that perhaps we want to travel down the road that is less travelled. We want to have inclusive growth with low debt and prudent fiscal management,” he said.