## The Caribbean and the IMF: Building on a Strong Partnership

_IMF Blog, June 14, 2022_

## Source details

**Canonical URL:** [The Caribbean and the IMF: Building on a Strong Partnership](https://www.imf.org/en/blogs/articles/2022/06/14/the-caribbean-and-the-imf-building-on-a-strong-partnership)

## Other formats

- [Markdown version](/en/blogs/articles/2022/06/14/the-caribbean-and-the-imf-building-on-a-strong-partnership/index.md)
- [Structured JSON version](/en/blogs/articles/2022/06/14/the-caribbean-and-the-imf-building-on-a-strong-partnership/index.json)
- [Bundle manifest](/en/blogs/articles/2022/06/14/the-caribbean-and-the-imf-building-on-a-strong-partnership/bundle-manifest.json)

## Bibliographic details
- Authors: the pandemic, lockdowns, contracting three times as much as the rest of the world in 2020.
- Published: June 14, 2022

---

### Regional economic context and recent performance
- Caribbean economies were especially hard hit by the pandemic and lockdowns, contracting three times as much as the rest of the world in 2020.
- While tourism remains below pre-COVID levels for most countries, it is on the rebound and gaining momentum.
- Growth projection: the region is expected to grow by about 3.7 percent this year.
- Major near-term pressures:
  - Higher global food and fuel prices, exacerbated by the war in Ukraine, are putting upward pressure on inflation.
  - Tightening global financial conditions will increase the costs of servicing current debt and of acquiring new financing.
  - Elevated government debt for most countries in the region, in part due to pandemic-response spending.
  - Significant threat from climate change: more frequent and intense natural disasters, and the relentless rise in sea levels.

### Policy recommendations and country examples
- Social protection and targeted support:
  - Governments should target support to families in need by strengthening the adequacy and efficiency of social assistance.
  - Example: Grenada scaled up cash transfers through their main social assistance program to ensure households were adequately compensated for increased living costs.
  - Cash-transfer programs are presented as better support than measures like price controls on imported products, while conserving limited fiscal resources.
- Health measures to support recovery:
  - Upgrading COVID-19 testing and reducing vaccine hesitancy will strengthen health systems and give tourists the confidence to return.
- Monetary policy and financial stability:
  - Central banks with independent monetary policy should act decisively to address inflation and communicate clearly.
  - Added vigilance is needed to preserve financial stability as debt suspension programs from earlier in the pandemic expire.
- Disaster resilience and climate adaptation:
  - Disaster resilience strategies that incorporate climate risks and adaptation plans into budgets and infrastructure investments are essential.
  - Examples: Dominica and Grenada developed disaster resilience strategies to integrate climate risks into planning.
- Novel debt and financing instruments:
  - Contract clauses that allow for delayed debt repayment when disaster strikes (such as those introduced by Barbados and Grenada during public debt restructurings) are promising for financial resilience.
  - Debt-for-nature swap example: Belize agreed to specific marine protections in exchange for a reduction in its international debt to private bondholders.

### IMF engagement, instruments, and partnership
- Technical assistance and capacity building:
  - The Caribbean Technical Assistance Center in Bridgetown celebrates 20 years of delivering technical assistance and training to help governments across the region.
- Financial support and program examples:
  - Barbados: an IMF-supported program since 2018 helped stabilize the government and deploy macroeconomic policies to counter the pandemic and support vulnerable people.
  - Jamaica and Grenada: restored stability and reduced debt through IMF-supported programs before the pandemic, positioning them better to respond to COVID-19.
  - Suriname: a recent IMF-supported program to restore macroeconomic stability is described as off to a strong start.
- New financing to address structural challenges:
  - The IMF’s new Resilience and Sustainability Trust (RST) provides affordable, longer-term financing designed to help countries address structural challenges—like climate change and pandemics—and build resilience to external shocks and ensure sustainable growth.
  - All Caribbean IMF member countries are eligible for the RST, including countries in the region that have previously not had access to concessional IMF financing.
  - The RST is intended to catalyze financing from international financial institutions and the private sector.
  - The RST development is noted as owing in part to Prime Minister Mottley’s advocacy.

### Strategic priorities for building resilience
- Define and implement the right economic policies to:
  - Tame inflation.
  - Protect the most vulnerable.
  - Address debt.
  - Fight climate change.
  - Reinforce the economic recovery and build resilience to future shocks.
- Mobilize climate financing and safeguard debt sustainability affected by climate-related and natural disasters through a more comprehensive financial framework, including novel financing solutions.

*Op-Ed published in The Nation, Jamaica Observer, and Caribbean Media Corporation (CMC).*

---


## References

- [adaptation](https://www.imf.org/en/Publications/staff-climate-notes/Issues/2022/03/16/Planning-and-Mainstreaming-Adaptation-to-Climate-Change-in-Fiscal-Policy-512776)

_Source: https://www.imf.org/en/blogs/articles/2022/06/14/the-caribbean-and-the-imf-building-on-a-strong-partnership_