Prime Minister Mia Amor Mottley has emphasised the importance of natural disaster and pandemic clauses, saying they are critical for these times.
Ms. Mottley expressed this view on Wednesday as she participated in a high-level panel discussion for the Virtual Conference on Climate-Related Natural Disasters: Macroeconomic Effects and Policy Responses, hosted by the International Monetary Fund.
The Prime Minister proffered the view that natural disaster clauses brought certainty to the lender and borrower. “I am very happy we had this clause…. I wished we would have had it for the pandemic…. I wish also that the international financial institutions [regional and multilateral development banks] would take it (the natural disaster clause) up and we have been campaigning for that, largely because…quite frankly, it will give us that fiscal space for two years, should an event occur.
“If we had had it (the clause) with the pandemic, we would have been able to remove an average of 7 to 8 per cent of our own GDP in terms of fiscal space to meet the concerns. Our debt has gone from 177% to 118% and it has gone back up now to 152%, largely as a result of the pandemic and…not because of increased borrowing, but because of contraction of our economy.”
Ms. Mottley surmised that the COVID-19 pandemic had reversed the country by at least a decade or two. She suggested that a bespoke set of arrangements was needed to allow for the refinancing of COVID-19 debt into long term instruments.
“But it is not only that, if we don’t have the fiscal space to spend the money that we can get at concessional terms, we are still no way better in terms of being able to meet the needs of our country as policy makers. So, it is both access to concessional resources and access to fiscal space,” she explained.
The Prime Minister pointed out that if the fiscal anchor was not moved sufficiently, then there would still be a programme of austerity.
“May I say, you can always bring back down debt, as we have shown, but what we can’t do is reverse the social implosion which invariably takes a generation to reverse. So, these are the real issues that are fighting us and this is why we feel we can have certainty on natural disaster and pandemic clauses…. [They] allow us to be able to do the other things that are more complex,” she added.
Ms. Mottley thanked the IMF for working with her Government to restructure the economy, noting that the country was not where it needed to be yet, but it was going in the right direction.