Castries, Lucia.
The Board of Governors of the Caribbean Development Bank (CDB) began a two-day meeting in St Lucia today with a warning to regional countries that while they urgently need to address their fiscal and debt issues, a narrow adjustment programme will be unsustainable.
CDB president Dr. Warren Smith told the opening ceremony attended by several government leaders, finance ministers as well as representatives from regional and international financial institutions that an optimal adjustment strategy cannot ignore the principal casualties of fiscal tightening.
“It ought to include mechanisms to cushion the impact on the most vulnerable, and provide practical pathways to their economic and social empowerment,” Smith said, noting that the ultimate route out of the fiscal and debt trap is robust economic growth.
“This will require appropriate domestic policy reforms, underpinned by front-loaded climate and economic resiliency measures,” Smith said in his address titled “ Imperatives for Securing Our Caribbean Future”.
He said debt relief for highly-indebted middle-income Caribbean countries is now impatient of debate and its legitimacy should be the outcome of broad-based discussions between donors and borrowing member countries (BMCs) and could be executed through the multilateral financial institutions, such as CDB.
He said while Caribbean countries mis-diagnosed the severity and duration of the international recession, and consequently, moved too slowly to begin their fiscal and structural adjustment, there are three important requirements for a successful adjustment.
Smith said that debt restructuring, if necessary, should be tailored to the specific realities of the country, warning “one size does not fit all”.
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