ROUGH YEAR AHEAD

In light of the regional impact of COVID-19, President of the Caribbean Development Bank, Dr. Warren Smith said he believes that consideration must be done to improve regional connectivity to strengthen support between the Borrowing Member Countries (BMCs).

Smith was speaking on an online forum hosted by the University of the West Indies, Caribbean Unity or Plurality - The Region’s Response to COVID-19 and explained that the region would be hit harder than other areas of the world.

“For our region as a whole, the impact of COVID-19 is expected to be much more profound than it is in other parts of the world,” it was pointed out.
Smith outlined that the critical issue was the extent of which the foreign exchange of the region was resilient to the COVID-19 fallout. The president explained that due to small and open economies, which were dependent on a very narrow range of goods and services, mostly tourism, to generate foreign exchange, it would be a rough year. The length of the impact, according to Smith, depended on the foreign exchange buffer of each country, the duration of travel impact and the export concentration in relation to travel receipts.

The president of the CDB highlighted that the countries would have to find a way to support each other by working together to help improve supply resilience when the traditional sources become constrained. This is needed especially as policy makers will have to balance decreases in taxes and other revenues with an increase in expenditures to respond to health emergencies and the support of economies.

“Can we in this time consider purchasing more goods and services from within the region? What are the bottlenecks that we need to overcome and can this be done within a short timeframe?” asked Smith.

Referencing simulations done by the CDB, Smith said that the staff had assumed a 50% and 80% decline in tourism and an oil price of US$35 value for oil and had seen results showing 20% GDP decline for Barbados, 17% approximately for Grenada and St. Lucia and 10% for Trinidad and Tobago. The impact to the Tourism Sector is expected to last as far as the start of the 2020/2021 winter season in November, but the real figures would depend not only on the duration of the pandemic but also the effectiveness of policy responses. However, the president reassured the BMCs that the CDB stood ready to assist, citing US$90 million in resources which the bank had reallocated.

“CDB stands ready to support its BMCs as they weather the COVID-19 storm and for us to be a partner in the post crisis period. We recognise the given crisis that we face, the level of support needed cannot be remit of a single agency. This is a global crisis and as such requires a global response of strong partnerships,” it was further pointed out.

Smith announced that the CDB was willing to play the role of co-ordinator of resources, mobilised on behalf of the region, leveraging long-standing relationships with bilateral and multilateral partners. He also pointed out that the most vulnerable would have the highest priority.
(AS)