EDITORIAL: Hopes pinned on ECLAC role
TOWARDS the end of last year, the Economic Commission for Latin America and the Caribbean (ECLAC) put a case to China to use its influence to help ECLAC member states with their debt reduction.
In particular, ECLAC believes that China, the world’s second largest economy, can assist in helping the region to obtain concessional loans in order to restructure Caribbean and Latin American debt.
Countries making up ECLAC, and in particular the smaller Caribbean states would more than support the initiative since their debt profile remains extremely large. At least two of them have debt to GDP ratios in excess of 100 per cent, while others are still in the high 80s and 90s. This high debt continues to create challenges for these regional countries at a time when inflows of capital have slowed, therefore putting additional pressures on economic growth. Taking into consideration the fact that the region faces further challenges from climate change and the fury of hurricanes, as seen last year during the Atlantic Hurricane season and as reported last week by the Caribbean Development Bank, then the magnitude of what they are up against becomes even more significant. At that news conference, which the CDB held to review Caribbean economies, the Bank reported that it would be spending between BDS$1.4 billion and BDS$1.6 billion to assist countries affected by the hurricanes.
CDB officials are projecting a two per cent growth rate for Caribbean countries in 2018 when compared to the less than one per cent which they achieved in 2017. By any yardstick two per cent growth is miniscule and the problem here is that not all of the Caribbean economies will grow by that amount.
ECLAC is a specialised agency of the United Nations created in 1948. It is based in Chile and over the several years of its existence is quite aware of what the Latin America and the Caribbean region encounters in the broad plan to development and to grow their economies. ECLAC has been playing a pivotal role in the development of Hemispheric countries. It keeps a watch on their economies, highlights their economic performance and in the past would have added its voice to difficulties which the Doha Round of global trade talks have been airing and the frustration at times its member countries have raised on these matters.
The decision, especially that of the World Bank to graduate several developing countries, including those from the Caribbean, from accessing concessionary financing, has not gone down well with these countries.
They have insisted that their high per capita incomes ought not be a yardstick for graduating them as has been the case since they face a shortage of financing for their economic development, they have a narrow economic base, are confronted by the same climate changes and their economies are susceptible to global shocks.
The ECLAC’s Secretary General, Alicia Barcena, has pointed out that in the financial arena, China has provided substantial sums to the entire region, an amount surpassing that received through such institutions as the Inter-American Development Bank and the World Bank. She added that an initiative which China has put together for the region offers an opportunity for an improvement in trade, investment, tourism and cultural ties.
These at least signal some hope for the region.