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Caribbean Nations Among Hapless Victims of Global Financial Crisis

Posted by CaribShout on October 14, 2009 at 12:05am
We meet at a critical juncture as the world confronts multiple crises –the global financial and econo­mic crises, food, ener­gy and the climate change, joined by the H1N1 pandemic. Both developed and developing countries are affected by these crises. (But) it is the poorest and the most vulnerable however, who re disproportionately affected, and who are incapable of responding.

(Kenneth Baugh is Jamaica’s Deputy Prime Minister and Minister of Foreign affairs and Foreign Trade. He was at the time addressing the 64th session of the United Nations General Assembly in New York.) Even as major economies are reporting their emergence from the global recession, the outlook for most developing countries remains bleak. For many developing countries, there are no early signs of so-called “green shoots” of economic recovery. For the majority of these countries, the impact of the recession will be deep, it will be prolonged and it will be painful. The irony is that developing countries are hapless victims of a crisis for which they are inculpable. The synchronized nature of the downturn in the world economy means that its repercussion is evident in virtually every sphere – inflows of financing and investment have plunged precipitously; exports are weak; commodity prices are low; and official development assistance has diminished drastically. These consequences are reflected in Jamaica and throughout the Caricom region. Countries like ours now face the daunting challenge of protecting the most vulnerable of their citizens in a responsible and sustain manner in the context of declining export demand, contraction in servi­ces, including tourism, and lower remittances. Like most developing countries, the fiscal and financial stress has forced us to make significant adjustments to our expenditure programs. The distressing reality is that we in the developing world have limited scope and capacity to mitigate the impact of the crisis. We neither have the fiscal flexibility nor the policy space to afford ambitious stimulus packages to respond effectively to the upheavals in our economy. A major corollary of the economic downturn is the problem of debt servicing and debt sustainability. Many developing countries could be on the verge of a debt crisis and require social support to help them attenuate the impact of the global crisis. Jamaica has always supported efforts to assist highly indebted poor countries which have benefited from debt relief initiatives. Middle Income countries But there us another group of developing countries which are equally burdened by high debt and are deserving of special consideration. I speak of the heavily indebted lower middle income countries that are overlooked on the presumption that these countries, by virtue of their levels of gross domestic product per capita, do not require international assistance. This approach continues to mask the reality of our vulnerability to external shocks, persistently high levels of poverty and dependence on commodity exports. Jamaica is particularly concerned that the situation of the highly indebted middle income countries are not able to benefit from the kind of assistance available to the least developed countries and the highly indebted poor countries, but which have been devastated by the impact of the global economic and financial crisis. Jamaica is currently saddled with a GDP ratio of 125 per cent. Along with our Caricom partners we will continue to advocate for a special category of small vulnerable and highly indebted middle income countries. A review of the criteria for determining middle income status can help to address financial resource accessibility in the long term. We are lobbying for a review of the criteria. The pervasiveness of the crisis makes it imperative that coordinated international action is taken. Leaders of the G20 met (in Pittsburgh recently) to review the progress of commitments made at their last summit and chart a course to counter the impact of the adverse economic environment. As much as we value the inclusion of advanced developing countries in the G20 process, we believe that is critical that space is made to accommodate the voices of a wider cross section of developing countries, particularly the most vulnerable ones. Our interest is in ensuring that the particular needs of small, vulnerable countries of the Caricom sub-region are addressed through appropriate representation at the summits of the G20. We must have an integrated approach in order to craft the type of common strategy that a crisis of this magnitude dictates. At the sane time, the United Nations must play an essential role in helping to manage the various ramifications of the crisis. It can ensure dialogue and enable a coordinated response based on an inclusive decision-making process. The UN Conference on the World Financial and Economic Crisis and its impact on development, held in June, provided a useful platform. Developing countries that are not part of the G20 group were able to bring their concerns to the international community and to contribute to the search for solutions to the crisis. We are encouraged by the candor of leaders from the major industrialized countries who expressed their commitment to effectively address the concerns of developing countries to cope with the crisis. (Kenneth Baugh is Jamaica’s Deputy Prime Minister and Minister of Foreign affairs and Foreign Trade. He was at the time addressing the 64th session of the United Nations General Assembly in New York.)
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