Prime Minister Mia Amor Mottley is urging Caribbean heads to consider the possibilities that lie in the issuance of Caribbean growth and resilience bonds to fuel growth and development throughout the region.
She outlined that an ability to attract “even just five per cent of savings within the region” could result in US$2.5 billion, 25 times the amount for which the CARICOM Development Fund (CDF) was responsible.
Ms. Mottley was at the time addressing the 8th Annual General Meeting of the CDF at the Accra Beach Resort and Spa on Tuesday. The CDF is an institution of the Caribbean Community established to provide financial or technical assistance to disadvantaged countries, regions and sectors in CARICOM.
The Prime Minister stated that the region had a commercial banking sector that was “lukewarm”, with respect to its consideration of projects that could drive tourism development at the national level.
“In a world where capital moves freely, those banks will find the opportunities that gives them the greatest return. If they can find a greater return in Central or Latin America, they are not going to ‘humbug’ themselves…we are just too small…to be concerned about. It is too small to take the time and the expense to even do the assessment of the risk so you abandon the relationship, and you de-risk,” she explained.
However, Ms. Mottley said the CDF was important as there was a need to create a framework that provided additional assistance to countries, regions and sectors.
But, she lamented that a fund hovering at about US$100 million could not fulfil that role in a number of countries in the region.
“We have, therefore, to come to recognize that it is in the context of the issuance of growth and resilience bonds…that we can expand significantly the capital base of this fund and to allow it to play the role that is absolutely critical to growth within this region and the sub-region in particular,” the Prime Minister stated.
She called for a revisiting of the charter that established the fund, in an effort to reach out to the people of the region, and create “win-win” opportunities to fuel growth and build resilience.
Ms. Mottley explained that the bonds could provide the capital base for the CDF, which could be expanded to allow it to play a critical role to growth within the region and the sub-region.
“I raise it against the background that the domestic savings within the Caribbean Community is on or about US$49 billion. We need to ask ourselves if our citizens are happy to have those level of savings attract rates of return in the form of a savings rate that hover at about 0.1 per cent; nowhere near what is reasonable against the background of inflation or even against the background of bank rates and charges. Such that persons may end up in a net position delivering to the bank rather than receiving from, in some instances,” the Prime Minister pointed out.
Ms. Mottley added that she hoped to see the advancement of the process to establish the bonds being one of the outcomes of the meeting.
Noting that next year’s Heads of Government Intercessional meeting will take place here in February, the Prime Minister said: “I hope that in Bridgetown we can see a paper that will allow us to be able to change the articles of this body to allow it to be that entity that can relate to ordinary people through the issuance of Caribbean growth and resilience bonds that will see us take ownership of the financing mechanisms of the region in a way that we have not completely done.”
Meanwhile, Ms. Mottley gave the assurance that Barbados was committed to honouring its obligations to the CDF before the end of the second cycle, despite being in an IMF programme.
“Fundamentally, our future is inextricably linked to success of the CARICOM Single Market and Economy. It is not an easy task, [but] we are working with the fund now to determine how best we can settle those arrears which we inherited,” she said.