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Commonwealth and UNDP work with Caribbean on debt challenges

28 January 2013
“This requires combined wisdom to explore ways of dealing with this challenge if efforts to accelerate progress towards the Millennium Development Goals are to bear fruit” – Cyrus Rustomjee

Senior finance officials from Commonwealth Caribbean countries will meet in Trinidad and Tobago from 29 to 30 January 2013 to discuss ways of managing debt in the face of uncontrollable shocks to their economies.

The workshop in Port of Spain, jointly organised by the Commonwealth Secretariat and the United Nations Development Programme (UNDP) in collaboration with the Central Bank of Trinidad and Tobago, will also be attended by major international and regional financial institutions such as the International Monetary Fund, World Bank, Inter-American Development Bank and Caribbean Development Bank.

The workshop will raise awareness of the impact of shocks on national debt and the wider Caribbean economy, as well as engage participants in discussion on the applicability of a countercyclical loans mechanism, a loan instrument utilised by the Agence Française de Développement - the main implementing agency for France’s official development assistance - to help countries manage debt in the event of unforeseen negative events.

There will also be discussion on various uncommon and new sources of financing that could be useful for helping Caribbean countries cope with their current debt challenges.

“The issue of addressing the effect of high debt levels of small vulnerable economies has largely not been adequately tackled by the international community. This is now the time to do it,” said Dr Cyrus Rustomjee, the director of economic affairs at the Commonwealth Secretariat.

He added: “Research by the Commonwealth and UNDP has shown that public debt levels have been on an unsustainable rise in several Caribbean countries for some time. This requires combined wisdom to explore ways of dealing with this challenge if efforts to accelerate progress towards the Millennium Development Goals are to bear fruit.”

Research shows that the debt situation of many small vulnerable economies in the Caribbean has been worsening for some time, driven by the recent concurrent food, fuel and financial crises and combined with extreme weather conditions such as hurricanes in some cases. At the end of 2011, at least five countries in the Caribbean region held public-debt to Gross Domestic Product ratios that were in excess of 90 per cent, with several others at over 65 per cent.

Dr Rustomjee asserted that such figures largely imply that at a time of persistent slow growth and comparatively high debt burdens, Caribbean countries will have fewer funds available to spend on necessary social services, such as education and healthcare.

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