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Leaders in Self-denial as Caribbean Economic Crisis Worsens

Self-denialSt Lucia’s Prime Minister Dr Kenny Anthony says that there is a grave economic crisis gnawing away at Caribbean countries and “governments are busy looking inward - each busy with their own agenda rather than pursuing a Caribbean solution to the economic crisis”. 

Not for the first time Dr Anthony has dared to tred where many other Caribbean leaders have shied away.

Describing it as a “tragedy of the times”, he charged that governments are “engaged in one form or another of self-denial” while the Caribbean is “in the throes of a major crisis like it has never ever experienced before”.



Dr Anthony did not say something not previously said by regional commentators, foreign aid agencies and multilateral institutions.  But now it has come from a Prime Minister who was previously Legal Counsel to the Secretariat of the 15-nation Caribbean Community and Common Market (CARICOM) and, earlier, a lecturer at the University of the West Indies deeply immersed in the many challenges and limited prospects of small States.  His remarks, therefore, come with a special authority and should be a reality jolt for all Caribbean leaders in government, opposition political parties, the private sector and the labour movement.

Dr Anthony’s comments are of greater significance because they were a spontaneous response to a question after a lecture he delivered on “Education in the Caribbean” at the Barbados campus of the University of the West Indies on 29 October. 

In this context, his observations have to be regarded as coming from that inner place in the soul that confronts reality when all other options have been exhausted.

Dr Anthony has sounded these alarm bells before.  Almost a year before on 31 October 2012, he had spoken similarly to the Barbados Chamber of Commerce when he said: “Make no mistake about it, our region is in the throes of the greatest crisis since independence. The spectre of evolving into failed societies is no longer a subject of imagination. How our societies crawl out of this vicious vortex of persistent low growth, crippling debt, huge fiscal deficits and high unemployment is the single most important question facing us at this time”.

With the exception of Trinidad and Tobago where oil and gas revenues keep the economy buoyant, and Guyana with its broad agricultural and mineral base, the economic picture of the majority of CARICOM countries is grim.   Yet, some governments try to airbrush from the portrait rising poverty, rising unemployment, rising debt and declining economic growth.  The few encouraging words in country reports of the International Monetary Fund (IMF) and World Bank are inflated in government statements to try to conceal the more damaging assessments of the condition of many economies.

 The objective seems to be to try to persuade their populations that all is well, when all is far from well and to convince people against the reality of their own day to day experience.

In almost every country, except Trinidad and Tobago (37.30% ) debt to GDP ratios are high and expenditure on education and health has declined either in real terms or as a proportion of governments’ total budget.

Generally, Government debt as a percent of GDP is used by investors to measure a country’s ability to make future payments on its debt. When debt is high in relation to GDP, the country’s borrowing costs and yields from government bond are adversely affected.

Worryingly, a UNDP report says: “There is a recent trend amongst several Caribbean nations of domestic debt increasing as a percentage of their total debt burden. Large amounts of sovereign debt are typically held by domestic banks and a sovereign’s default can often be followed by a domestic banking crisis. This means that shifts in the composition of the debt (from foreign) towards domestic debt can increase rather than decrease debt vulnerabilities for governments”.

Many governments in CARICOM have high domestic debt owed mostly to local commercial banks, and in some cases, to Statutory Corporations.  The failure of any of these governments to service their domestic debt or to require restructuring would cause havoc for local savings and also for state-run pensions and health schemes.

While this problem exists in the larger countries of CARICOM including The Bahamas, Barbados and Jamaica, it bedevils the sub-regional group of seven territories that comprise the Organisation of Eastern Caribbean States (OECS).  These territories and the British dependency, Anguilla, form the Eastern Caribbean Currency Union (ECCU) which has a single currency and a common Monetary Authority that also regulates the Union’s domestic banks.

Dr Anthony shortly assumes the Chairmanship of the ECCB when governments are pursuing insular policies that, in many instances, conflict with stated goals for the fiscal stability of the area. A snapshot of recent reports compiled by the IMF, World Bank and the United Nations Development Programme shows these December 2012 debt-to-GDP ratios in OECS members: Grenada 104%; St Kitts-Nevis 92%; Antigua and Barbuda 89%; Dominica 72%; St Vincent and the Grenadines 70 %.  


Dr Anthony’s own St Lucia is the largest economy in the ECCU but the IMF says that “external and domestic uncertainties led to a broad-based decline in activity in 2012” and public debt increased to 78% of GDP.

Given that the members of the OECS already have a single currency and many shared institutions such as the ECCB, the deeper integration of their economies and the establishment of binding decision-making machinery would improve their economic circumstances.  Each government could reduce expenditure through the expansion and deepening of functional co-operation in a range of areas.  They could also widen and deepen areas for production integration in the development of their natural resources through cross-border investment and by joint backing of loans raised on the international market for economically sustainable projects in food production and geothermal energy.

But this would call for a greater element of political integration than OECS governments have been willing to undertake.

The picture is no more encouraging on the wider CARICOM front.  On the debt-to-GDP ratio, at the low end is The Bahamas at an all-time high of 49.9%, Guyana 60% (but with the second lowest per capita income after Haiti), Belize 78%, Barbados 116%, and Jamaica highest at 147%.

In April 2011 at the very meeting when CARICOM leaders decided to put the development of a Single Economy on “pause”, they had before them a paper, Re-Energising Caricom Integration, produced by a group of CARICOM experts that identified areas of joint investment that could considerably reduce costs to governments and spin-off new economic activity.  Three key areas were: agriculture and food sovereignty; renewable energy; and maritime transport. That paper is well worth revisiting as one way of addressing the crisis that Dr Anthony has highlighted.

He is to be congratulated for his courage in speaking up for a second time.  A third occasion would be less convincing.  Now, action is required by all.

Sir Ronald Sanders is a Consultant, Senior Research Fellow at London University and former Caribbean diplomat.  

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12 Comments In This Article   

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RE: Leaders in Self-denial as Caribbean Economic Crisis Worsens

#12 G. Pea » 2013-11-11 14:43

I disagree completely with Dr. Anthony, Our leaders, and I use that title jokingly, know what to do. But all they care about is staying in power and therefore does not have the "you know what" to do what it takes.

Simply put our "leaders" only care about their respective party and individual pockets. NOT ABOUT THE NATIONS PEOPLE.
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G. Pea

Get real Lovell and Spencer

#11 Living in Denial » 2013-11-11 10:49

"Real FDI investor" are smarter then believing the "hype" of Lovell and B.S. Furthermore, it doesn't take a rocket scientist to see the incompetence from government and the risks associated in investing in Antigua in light of HMB. This government doesn't respect the Rule of Law and how can a foreign investor be secure with such a government?
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Living in Denial

Get real Lovell

#10 Living in Denial » 2013-11-11 10:44

The reality is that Minister Lovell and B.S. are some of the leaders in denial. Poverty rising, crime rising, debt rising and GDP to debt ration is rising. Our economy is based in tourism and that market share is reducing. There is no money being invested in maintenance of our infrastructure, health care, pension system nor any other basic "quality of life" assets for the country. We are borrowing additional debt to pay our past debt and the debt service is eating away at a greater percentage of government revenue annually. These are fundamental economic issues that show that our current path of fiscal governance is unsustainable. The only response from government is more debt issues and selling citizenship and vital government assets.
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Living in Denial

@ jeb

#9 SlyThatGuy » 2013-11-10 20:01

Yes, jeb, if you're referring to the hundreds of million that members of the Antigua Labor Party have stolen from the citizens through the IHI scheme and through receiving kickbacks, I think about that fact almost every day. However, if you're accusing the members of the UPP and especially Baldwin Spencer of stealing money from the coffer of this country, you're just doing so because you want to cause injury to the prime minister's reputation. First, you have no credible evidence, but I know someone like you (and those who are quick to believe) has no interest in evidence. Second, You've already decided that he's guilty of committing theft even without entering any evidence. I know It doesn't matter to you that the accusation is a lie or if the accused are innocent or guilty as long as you do some damage.
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SlyThatGuy

...Prophet Marcus Garvey

#8 Jumbee Picknee » 2013-11-10 15:42

Jeb you hit the nail squarely on the head, as you drive home the essential points of why many of the Caribbean Nations are in this state of quandary/quagmire.
The message which Dr. Anthony is attempting to drive home into Our Leaders though processes/brains; sounding the alarm etc., have been done over and over and over again by many great thinkers and seers like the Prophet Marcus Mosiah Garvey. We all know of his attempts to Unify the Causes of the Alkebulans/Africans at home and abroad. We also know of the propaganda machinery which was used to destroy those efforts.
There is enough blame to encircle the entire Caribbean Sea many times over; however, at this juncture, rather than being a player in the "blame-U-games" better known as politics, the People need to remove their heads from the sand, emanate their cohesive, positive energy's to bring forth the kind of harmonious peace which Our Nations, so desperately needs...

Jah Guide in...One Positive Aim, Love, Unity...
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Jumbee Picknee

@ jeb - There are investors out there and we have no FDI, ask yourself why.

#7 Skyewill » 2013-11-10 15:23

Boy, you really hit the nail on the head. You asked why? It may be one of more of a few things. 1 there are no kick back from legit investors. 2. The Persons in charge have NO CLUE as to what an investor looks like. They have no underwriting skills and no knowledge of how to vet real investors. It could also be that when real investors come they do not know the protocol as to the next step or the type of questions to ask. As for your other response to Slythatguy, the slickster, you are totally on point. They thinks they can pull the same old foolishness. I am glad you let them know that HMB, WPP, CARNT PARK and all that money wasted has nothing to do with world crisis. Dem tink arewe fooley!
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Skyewill

@ SlyThatGuy

#6 jeb » 2013-11-10 14:32

Aside from blaming the market crash situation, do you not think about the fact and effect of hundreds of millions that have/are been stolen from the coffers of this country? These thefts occur in so many ways on a daily basis from overcharging, kickbacks, sale of buildings, power plants that do not work, fences, walls, sidewalks, trucking contracts, sharing the rents, unnecessary travelling, household bills and so the list goes on and on and the extent of that list is truly enough to make one want to puke; especially so when considering that those monies could have been available for the genuine needs of the people/country and reduce the national debt. I really think that one needs to take a totally non partisan look and try to grasp the gravity of the situation that we have been plunged into by the greedy and thoughtless persons who have been able to maneuver themselves into positions that present an opportunity to steal our money and then blatantly doing that without even the slightest regard for country or people who are doubly suffering as a result. Take an ongoing project…the (very ugly) airport, and ask yourself, do we really need to spend 70 plus million on something we do not need and who is getting what out of it, and very negative effect of taxes to pay for same. Hope you did not think that the airport is honest because the chances of that are slim to none! And so it is with everything else. There are investors out there and we have no FDI, ask yourself why.
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jeb

@slythatguy

#5 make sense » 2013-11-10 14:24

well said slythatguy. You make a lot of sense. Many people (including skyewill) believe that the UPP is responsible for our economic woes and think that the ALP have the solutions to the economic crisis facing Antigua and Barbuda, and to compound that with repealing income tax will spell sure disaster to our already fragile economy. Even during good times when there was no worldwide recession, Stanford was present etc, ALP could not pay government salaries! How soon do we forget.

Antiguans beware of the ALP
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make sense

RE: Leaders in Self-denial as Caribbean Economic Crisis Worsens

#4 SlyThatGuy » 2013-11-10 12:46

At least this guy, unlike the ALP leader, is honest enough to admit that there's a grave economic crisis gnawing away at Caribbean countries. This is proof that the effects of the market crash is still reeking havoc on the economy of many other countries, even though the opposition leader would have us believe this problem exist only in Antigua and Barbuda due to the incompetence of the UPP Government. That's why some people here are panicking and freaking out and are calling for the ALP thinking it can rescue them. But the reality is the Global Market Collapsed put all of us in a situation we did not expect to find ourselves in: Many of us who were employed suddenly found ourselves jobless and without an income. And the fact that our government has no means of assisting us with food stamps or unemployment benefits just makes a bad situation even worse. That would have been the same situation under an ALP Government.
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SlyThatGuy

The nasty truth

#3 logics » 2013-11-10 09:33

The nasty truth behind the failure of the OECS and CARICOM ventures, is that our politicians are too concerned about doing whatever it takes to get re-elected ( not just in Antigua) instead of doing what it takes to put the region in a better position to deal with eventualities like the global crisis that has been twisting our stomachs for the last four years. If we look at all the regional institutions such as UWI and CARDI, or any of the others that require all governments to pull their fair share, they are all of the brink of bankruptcy, because the politicians of the day who lead the government, are too busy trying to make themselves look good at home and fool their populations into thinking all is well. However, it can be seen that the international agencies have seen what is happening and have stopped assistance, meaning that local financial institutions have had to step in and unfortunately are being stuck with bad debts.
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logics

@ Meigo man

#2 Skyewill » 2013-11-10 08:39

Yet, when you go to events where government officials are keynote speakers all you hear is how wonderful they are and how great things are going. What I don't get is that they are all on the same page and is in total denial. At a recent Gala event an ambassador introduction of a particular minister described the minister as having the ability to walk on water. However, we all know this guy as a big joke and incompetent bundler whose foot stays consistently in his mouth. What make these people so unreal? Is the truth that we are all human and make mistakes so hard to swallow or is these people as perfect so much so that they are our only hope? After 10 years it is time to look at another group. 10 years is enough good or bad but if it's bad then 10 years is too much. CHANGE IS COMING TO ANTIGUA.
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Skyewill

Fair Antigua and Barbuda

#1 Meigo man » 2013-11-10 08:12

Our debt does not include the Half-Moon US$70 million and counting! It does not include the WPP or old engines bought for over US$60 million.

Does it include the Brazilian debt for the airport expansion?

What about the tens of millions sucked out from the Statutory Bodies?

What about the hundreds of millions taken from local banks (including some $300 million from ABI)?

What is most concerning is the UPP's total lack of accountability and lack of a plan going forward!
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Meigo man

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Sir Ronald Sanders

Sir Ronald Sanders is a business executive and former Caribbean diplomat who publishes widely on Small States in the global community.

 

 

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