## The Caribbean and the IMF—Building a Partnership for the Future, by Christine Lagarde, Managing Director, IMF

_IMF News, June 27, 2014_

## Source details

**Canonical URL:** [The Caribbean and the IMF—Building a Partnership for the Future, by Christine Lagarde, Managing Director, IMF](https://www.imf.org/en/news/articles/2015/09/28/04/53/sp062714)

## Other formats

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## Bibliographic details
- Published: June 27, 2014

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### A changing Caribbean
- Regional legacy: "low growth, high debt, low competitiveness, high unemployment."
- Growth performance:
  - "Growth has averaged less than 2 percent a year since the mid-1990s" in tourism-dependent countries.
  - "Less than 1 percent in Jamaica."
  - "The economy grew by 1.6 percent year-over-year in the first quarter of 2014" (Jamaica).
  - "St. Kitts and Nevis... grew by almost 4 percent last year."
- Public debt and fiscal vulnerability:
  - "Public debt is still at record highs—almost 100 percent of GDP in tourism-dependent countries, and 140 percent of GDP here in Jamaica."
  - "Public debt has fallen by 15 percent of GDP in Antigua, and by one third in St. Kitts and Nevis."
- Social outcomes and labor markets:
  - "About a third of young people are out of work" (region-wide).
  - "In Jamaica, the poverty rate doubled to 17½ percent."
- Crisis legacy:
  - "Six years on, output has still not returned to pre-crisis levels."
  - Natural disaster exposure and macroeconomic volatility exacerbate vulnerability.
- Jamaica reform example:
  - Measures included a "wage freeze on civil servants," "a debt exchange for financial investors," "increases in taxes and tariffs for water and transportation," and allowance for the exchange rate to adjust.
  - Social protection: "raising cash transfers for poor households by 67 percent for the elderly and 15 percent for others last year, with another 15 percent increase planned for this October."
  - Institutional innovation: Economic Program Oversight Committee monitoring the reform program with representation from "public sector, private sector, civil society, and trade unions."

### Completing the Caribbean voyage (policy priorities and structural reforms)
- Overarching goal: "building on stability to lay the structural foundations of sustained and inclusive growth."
- Competitiveness:
  - Exchange-rate adjustment can restore competitiveness ("letting the exchange rate depreciate... has helped restore a good deal of lost competitiveness").
  - High energy costs are a binding constraint: "Electricity costs three times as much in Jamaica as in the United States. It costs even more in Barbados."
  - Policy directions: "conserving and renewing energy," "bring more competition and dynamism to the energy sector."
- Human capital and labor:
  - Invest "more smartly in education and training" to match skills to labor-market needs and lift youth prospects.
  - Make labor markets "more effective in creating jobs."
- Business climate and public sector:
  - Improve business environment by "reeling in much of the red tape" and simplifying fiscal incentives ("fiscal incentives could be made simpler and less murky").
  - Public sector should provide "greater predictability, transparency, and impartiality."
- Regional cooperation:
  - Advocate regional approaches to "transportation infrastructure and the marketing of tourism."
  - Warning against tax competition: "There would be more revenue for all if countries resisted the temptation to compete with each other on taxes to attract business."
- Climate change and resilience:
  - Climate change is "a first-order global priority" and a direct threat to low-lying islands (example: "Georgetown, Guyana’s capital, lies entirely below sea level").
  - National/regional adaptation priorities: invest in resilient infrastructure; improve water management; better land planning; strengthen institutional disaster management; strengthen catastrophic risk insurance frameworks.
- Three guiding principles for reform ownership and implementation:
  - Ownership of the reform program.
  - Stewardship of the economy, including nurturing resources and investing in people.
  - Partnership with each other and with the international community, including the IMF.

### A changing IMF (how the IMF supports the Caribbean)
- IMF as forum for international economic cooperation: "owned and operated by its members" including 188 member countries.
- Three core functions delivered to members:
  - Policy advice: convene knowledge and best practices; focus on sustainable and inclusive growth in the Caribbean through high-level conferences (Trinidad 2012, Bahamas 2013, Montego Bay later in 2014).
  - Lending:
    - "Making 159 new lending commitments and disbursing almost $200 billion" since the crisis.
    - Partnered with Antigua and Barbuda, St. Kitts and Nevis, Jamaica, Grenada; supported recovery after natural disasters in Haiti, Dominica, St. Lucia, and St. Vincent and the Grenadines.
  - Capacity building:
    - Technical assistance and training to members; "technical assistance to 90 percent of them."
    - Regional engagement through CARTAC (technical assistance center in Barbados) and emphasis on strengthening public financial management systems.
- Institutional stance and evolution:
  - Shift toward prioritizing "growth and jobs," addressing "excessive income inequality," climate change, and female labor-force participation.
  - Increased emphasis on protecting social safety nets and sharing adjustment burdens fairly.
  - Commitment to listen, learn, and adapt to member needs; reframing the IMF as combining "head" and "heart."

### Conclusion
- Both the Caribbean and the IMF "are very different today" than in previous decades.
- Progress requires continued reform, ownership, stewardship, and partnership to realize inclusive and resilient growth.
- Optimistic closing: invoke Derek Walcott—aspiration for "days when every street corner rounds itself into a sunlit surprise."

*Source: The Caribbean and the IMF—Building a Partnership for the Future, Christine Lagarde, Managing Director, International Monetary Fund, June 27, 2014.*

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## References

- [Barbados and the IMF](http://www.imf.org/external/country/BRB/index.htm)
- [Grenada and the IMF](http://www.imf.org/external/country/GRD/index.htm)
- [Jamaica and the IMF](http://www.imf.org/external/country/JAM/index.htm)
- [St. Kitts and Nevis and the IMF](http://www.imf.org/external/country/KNA/index.htm)
- [Trinidad and Tobago and the IMF](http://www.imf.org/external/country/TTO/index.htm)
- [St. Lucia and the IMF](http://www.imf.org/external/country/LCA/index.htm)
- [Technical Assistance -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-capacity-development)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp062714_