The International Monetary Fund (IMF) says it is prepared to intercede with European institutions as Caribbean countries continue to be critical of the international community in shifting the goalposts as it relates to the development of the international financial sector.
Dominica’s Prime Minister Roosevelt Skerrit had last month blasted the international community over its unilateral demands for tightening measures within the international financial services sector and called for a united Caribbean Community (CARICOM) approach to the situation.
Skerrit said that the Europeans and the Organization for Economic Cooperation and Development (OECD) among other institutions “have extended these impositions on all countries in the world” to the point that many parliaments in the Caribbean are now rushing to meet the end of month deadline or face being blacklisted.
He said even as the countries are giving assurances that they intend to meet the new measures, the goal posts are being changed even when original targets are being met. Skerrit described the new measures “as an external shock” for the region.
“The Prime Minister did not criticize the IMF on this issue. While the IMF is not involved in those decisions, we stand ready to support the government with technical assistance,” said IMF, Deputy Managing Director, Tao Zhang, told the Caribbean Media Corporation (CMC) ahead of a visit to Dominica and Grenada this week.
“The IMF is also willing to intercede with European institutions to ensure there is sufficient communication of the expectation with time for action and technical support, and to advocate for blacklisting as a last resource only in case of no cooperation.
“We played a similar advice and convening role recently with issues related to correspondent banking in the Caribbean,” he added.
Zhang, who will be visiting areas affected by Hurricane Maria in 2017, and looking at the progress made in the wake of that natural disaster, said soon after the storm, the IMF Managing Director Christine Lagarde met with Prime Minister Skerrit and offered ”our support.
“As the government has not relied much on external financial assistance for reconstruction given significant Citizenship by Investment (CBI) revenues, the IMF’s assistance has focused on policy advice and technical support.
“We contributed to the post-hurricane damage assessment in collaboration with the World Bank, and offered advice on macroeconomic policies related to recovery from the hurricane. IMF research also helped guide economic policies, including a cost-benefit analysis of investment in resilient infrastructure and insurance, to which the government of Dominica is fully committed.”
Zhang said key economic sectors in Dominica are now on a solid road to recovery, “exceeding our expectations.
“Retail and construction activities show strong performance given reconstruction and restocking across the island. Most sectors are recovering including agriculture, which is key given the social importance of the sector; water and electricity services are restored in the majority of the island”.
He said tourism is gradually picking up and due to construction activities, investment in retail, transport and service sectors, employment rates are also picking up.
“Dominica’s financial sector has remained stable despite the large shock. Similarly, I am encouraged by the steps that have been taken to improve Dominica’s ability to cope with natural disasters, namely the preparation of an integrated national climate resilience strategy and the establishment of the Climate Resilience Execution Agency, with financial support of the international community.”
Zhang said that the IMF has placed resilience to natural disasters at the center of its work on Dominica. “In addition to policy advice, technical support and analytical work to evaluate economic policies, the IMF can help operationalize Dominica’s national climate resilient strategy, including catalysing support from the donor community.”
In 2008, the IMF issued a call for investment in resilient infrastructure, despite its higher cost, and also encouraged the authorities to create a savings fund for natural disasters.
Zhang told CMC that “our analysis shows that investment in resilience to natural disasters can bring significant benefits to Dominica.
“First, economic output declines from destruction of productive infrastructure is lower with resilient investments, and post-disaster recovery is faster. But that is not where the story ends. The benefits of resilient investment also include a multiplicative effect from higher private investment, employment, and wages by protecting returns to private investment and labour. The returns to resilient investment more-than-compensates its additional cost. “
He said the Dominica government is currently pursuing resilient investments, as detailed in the Public Sector Investment Plan.
“This is in line with the government’s core objective of making Dominica the first disaster resilient state. The IMF is fully supportive of this vision, advocating a shift in paradigm from a focus to ex-ante resilience from ex-post recovery.”
The IMF official also supported the statement by Lagarde that the international community must come together to build a brighter future for all citizens of the world given that the need for this kind of cooperation is more urgent than ever.
Zhang said with regards to the Caribbean, a new multilateralism is important.
“The challenge of climate change and its effects on Caribbean countries calls for international cooperation. It is small states, such as Dominica, that are suffering disproportionally the consequences of climate change, even though they contribute little to the problem. This is a global problem that requires a global solution,” Zhang told CMC.