{ "title": "The Caribbean Challenge: Fostering Growth and Resilience Amidst Global Uncertainty", "publication": "IMF News, June 10, 2025", "sourceUrl": "https://www.imf.org/en/news/articles/2025/06/10/dmd-clarke-cdb-speech-june-10", "canonical": "https://www.imf.org/en/news/articles/2025/06/10/dmd-clarke-cdb-speech-june-10", "overlayPath": "/en/news/articles/2025/06/10/dmd-clarke-cdb-speech-june-10/index.md", "summary": "Deputy Managing Director, Nigel Clark's Speech Caribbean Challenge: Fostering Growth and Resilience Amidst Global Uncertainty. Caribbean Development Bank Annual Meetings, June 10, 2025", "publishDate": "2025-06-10", "sections": [ { "heading": "Introduction and road map", "content": "- Speech delivered at the 55th Annual Meeting of the Caribbean Development Bank, June 10, 2025.\n- Two urgent regional priorities: (1) lift growth prospects and living standards; (2) build resilience against persistent economic shocks and natural disasters.\n- Presentation outline: global context, Caribbean context, policy responses (macroeconomic and structural), IMF support." }, { "heading": "The global growth challenge", "content": "- IMF April World Economic Outlook downgrades:\n - Growth this year: from 3.3 to 2.8 percent (a 0.5 percentage point downgrade).\n - Growth in 2026: from 3.3 to 3.0 percent (a 0.3 percentage point downgrade).\n- Characterization:\n - Lowest global growth in approximately two decades, outside of 2020.\n - US effective tariff rate rose in early April to levels not seen in a century; trade policy uncertainty remains \"off the charts.\"\n- Transmission and risks:\n - Uncertainty raises planning costs, delays shipping and investment.\n - Tariffs raise fiscal revenues but reduce and shift economic activity and raise consumer prices.\n - Protectionism erodes long-run productivity, especially in smaller economies.\n- Financial vulnerabilities identified:\n - High valuations in segments of global equity and corporate bond markets.\n - Strain on highly leveraged nonbank financial institutions in volatile markets.\n - Sovereign bond market turbulence risk, especially where government debt levels are high.\n- Structural driver of weak medium‑term growth:\n - Broad-based slowdown in productivity growth accounts for more than half of the decline in global growth.\n - Without course correction, global growth by the end of this decade would be below the pre‑pandemic average by about 1 percentage point." }, { "heading": "The Caribbean growth and resilience challenge — outlook and impacts", "content": "- Regional baseline: tepid growth projected in the latest World Economic Outlook even before April tariff announcements; country heterogeneity (e.g., stronger Jamaica and Trinidad and Tobago; weak Haiti due to security).\n- Estimated immediate impact of April tariff announcement:\n - Lowers Caribbean regional growth by at least 0.2 percentage point on average.\n- Channels of transmission:\n - Tourism-dependent economies: impact depends on size of US tourist base.\n - Oil-exporting countries: affected by lower commodity prices and higher volatility.\n- Long-term trend and productivity:\n - Caribbean growth potential has declined to about half of what it was a few decades ago.\n - For tourism-dependent economies: potential growth decline from 3.3 percent (1981–2000) to 1.6 percent (2001–2019).\n - Caribbean productivity growth has declined to almost zero — central to the region’s growth challenge.\n- Notable exception:\n - Guyana: growth accelerated to over 45 percent on average in the past three years, progressing from low‑middle‑income to high‑income status.\n- Social and distributional stakes:\n - Slower growth stalls improvements in living standards and convergence with advanced economies." }, { "heading": "Major quantified vulnerabilities and regional statistics", "content": "- Debt and fiscal targets:\n - ECCU regional debt target: 60 percent of GDP by 2035.\n- Natural disaster impacts:\n - Major natural disasters cost an average of 2 percent of GDP per year in Caribbean countries and close to 4 percent of GDP in the Eastern Caribbean countries.\n- Insurance and risk transfer:\n - CCRIF payout after Hurricane Beryl: US$85 million across five countries (Grenada, St Vincent & the Grenadines, Trinidad and Tobago, the Cayman Islands and Jamaica).\n- Labor market and inclusion:\n - Youth unemployment in Caribbean countries: ranging from 10 to 40 percent.\n - ECCU gender gap in labor force participation: over 11 percentage points on average; eliminating the gap could boost regional GDP by roughly 10 percent.\n- Potential productivity gains from reforms:\n - Overcoming structural obstacles could bring productivity gains ranging from 34 to 65 percent and close the gap in income per capita with the US by 9 to 27 percentage points.\n- IMF membership and perspective:\n - IMF has 191 member countries (compared with the UN’s 192)." }, { "heading": "Policy prescriptions — maintain and entrench macroeconomic stability", "content": "- Core objective: foster resilient and inclusive growth that sustainably raises living standards by:\n - Maintaining macroeconomic stability (stable prices, sustainable fiscal trajectories, adequate foreign exchange reserves, financial sector stability).\n - Decisively and comprehensively addressing factors that raise growth potential.\n- Fiscal policy guidance:\n - Restore fiscal buffers, strengthen fiscal frameworks, and bolster resilience.\n - Mobilize tax revenue, spend wisely, and plan ahead.\n - Address weak tax yields: broaden bases, remove distortions, curb inefficient tax exemptions, and strengthen tax administrations.\n - Emphasize spending quality and composition; contain unproductive spending; enhance efficiency and digitalize government services.\n - Adopt strong medium‑term fiscal frameworks, well‑designed fiscal rules, and specific reform plans; combine debt and operational targets backed by capacity and institutions.\n - Example: Jamaica’s Financial Administration and Audit Act — public debt goal of 60 percent of GDP, rules for annual fiscal balance, and an Independent Fiscal Commission.\n- Exchange rate regimes and currency unions:\n - Internal consistency required within chosen currency regimes (floating or fixed).\n - Fiscal policies need to be sustainable and consistent with exchange rate regime to preserve currency union stability.\n- Sovereign wealth and contingency funds:\n - Well‑designed transparent sovereign wealth funds can stabilize public finances (examples: Trinidad and Tobago; Guyana; proposed St. Kitts and Nevis fund).\n - Legislated natural disaster saving (example: Jamaica)." }, { "heading": "Disaster preparedness and multi‑layered risk financing", "content": "- Multi-layer insurance framework recommended:\n - Layer 1: self‑insurance through fiscal buffers.\n - Layer 2: pooled risk transfer arrangements (CCRIF).\n - Layer 3: contingent financing (e.g., World Bank catastrophe deferred drawdown options; IDB credit contingent facilities).\n - Layer 4: catastrophe bonds (Jamaica with World Bank assistance).\n- Address rising reinsurance and domestic insurance premiums that reduce private coverage and increase government fiscal exposure." }, { "heading": "Structural reforms to raise growth potential — productivity, finance, energy, human capital, and infrastructure", "content": "- Raise total factor productivity and boost investment in physical and human capital.\n- Key structural obstacles in ECCU and broadly in the Caribbean:\n - High costs of finance, cumbersome tax administration, inefficient business licensing and permits, skills mismatches.\n- Regulatory simplification and digitalization:\n - Simplify and digitalize licensing, permitting, regulatory regimes, and tax payment procedures (e‑payment, e‑filing, e‑registration).\n - Invest in digital infrastructure, lower data transmission costs, improve digital literacy.\n- Improve access to finance:\n - Address bank balance sheet weaknesses; reduce non‑performing loan ratios; modernize insolvency regimes; enable faster out‑of‑court debt workouts.\n - Strengthen collateral infrastructure via credit registries and partial credit guarantee schemes (e.g., regional credit bureau in the Eastern Caribbean).\n - Strengthen AML/CFT frameworks to retain correspondent banking relationships.\n - Pursue payment-system innovations (mobile real‑time, instant, 24/7 platforms) modeled on India’s UPI and Brazil’s Pix, supported by national ID systems.\n- Seize renewable energy transition opportunities:\n - Energy importers: diversify into renewables to reduce import bills and high electricity prices (electricity in many Caribbean countries costs a minimum of twice as much as in advanced economies).\n - Energy exporters: manage fossil fuel demand changes, explore green petrochemicals and green hydrogen, consider carbon pricing to retain revenue domestically.\n - Example spillover risk: Trinidad and Tobago exposed to EU Carbon Border Adjustment Mechanism affecting over 5 percent of total exports (and a further 5 percent at risk if EU expands).\n - Immediate low‑cost steps: energy efficiency measures and retrofits (examples: Barbados and Jamaica).\n - Regional initiatives: Resilient Renewable Energy Infrastructure Investment Facility; pooled procurement and harmonized regulatory frameworks.\n- Invest in human capital and bridge skills gaps:\n - Expand vocational training, modernize education, active labor market policies, integrate AI/data science into education.\n - Aim for Caribbean schools to rank in the upper quartile of PISA benchmarks.\n - Examples of national efforts: Jamaica STEAM initiative; Barbados Economic Recovery and Transformation Plan (2022); St. Vincent and the Grenadines education reform; Antigua and Barbuda expansion of UWI Five Islands Campus.\n- Boost infrastructure investment:\n - Priority sectors: transportation (mass transit), roads and highways, broadband and telecommunications, water treatment and distribution, energy.\n - Governments should attract local, regional, and international private capital via well‑structured PPPs.\n - Pursue PPPs programmatically (pipeline developed in parallel) rather than sequentially to attract seasoned investors." }, { "heading": "The role of the IMF — modalities of engagement and regional support", "content": "- IMF engagement modalities:\n - Surveillance: Article IV Consultations (country‑specific policy advice, published).\n - Capacity development: technical assistance, training (e.g., CARTAC), tailored policy advice on tax, public spending, debt management, statistics, monetary tools.\n - Financing: lending toolkit to address balance of payments challenges; rapid facilities for emergencies; Resilience and Sustainability Facility for affordable long‑term financing.\n- Regional examples of IMF support:\n - Program engagements: Jamaica, Barbados, Suriname have made notable progress with IMF‑supported programs (Extended Fund Facility and other facilities).\n - Jamaica used the Precautionary and Liquidity Line without drawing, providing an insurance buffer.\n - Rapid financing provided to seven Caribbean member countries during the pandemic.\n - Barbados and Jamaica benefitted from the Resilience and Sustainability Facility to integrate climate risks, support renewable energy incentives, and catalyze resilience financing.\n - Haiti: engagement through a Staff‑Monitored Program to support policy objectives and build a track record for future financial assistance.\n- Capacity building and CARTAC:\n - CARTAC provides capacity building and policy advice across public finance management, tax and customs administration, financial supervision, and more.\n - CARTAC has operated since 2001; additional financing support is needed to close the financing gap." }, { "heading": "Call to action", "content": "- Imperatives for Caribbean policymakers:\n - Put macro‑fiscal houses in order.\n - Engage in deep, meaningful structural reforms to increase growth potential.\n - Implement reforms under national control; continue regional cooperation and capitalize on CARICOM for larger markets, movement of people, investment, and trade.\n - Maintain focus on delivering economic resilience, higher growth prospects, and better living standards.\n- IMF commitment:\n - The IMF remains committed to supporting Caribbean members through surveillance, capacity development, and financing.\n\nSource: Nigel Clarke, “The Caribbean Challenge: Fostering Growth and Resilience Amidst Global Uncertainty,” speech as prepared for delivery, June 10, 2025.\n\n---\n\n\n References\n\n- Nigel Clarke\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/06/10/dmd-clarke-cdb-speech-june-10" } ], "bullets": [ "[Markdown version](/en/news/articles/2025/06/10/dmd-clarke-cdb-speech-june-10/index.md)", "[Structured JSON version](/en/news/articles/2025/06/10/dmd-clarke-cdb-speech-june-10/index.json)", "[Bundle manifest](/en/news/articles/2025/06/10/dmd-clarke-cdb-speech-june-10/bundle-manifest.json)", "Published: June 10, 2025", "Speech delivered at the 55th Annual Meeting of the Caribbean Development Bank, June 10, 2025.", "Two urgent regional priorities: (1) lift growth prospects and living standards; (2) build resilience against persistent economic shocks and natural disasters.", "Presentation outline: global context, Caribbean context, policy responses (macroeconomic and structural), IMF support.", "IMF April World Economic Outlook downgrades:", "Characterization:", "Transmission and risks:", "Financial vulnerabilities identified:", "Structural driver of weak medium‑term growth:", "Regional baseline: tepid growth projected in the latest World Economic Outlook even before April tariff announcements; country heterogeneity (e.g., stronger Jamaica and Trinidad and Tobago; weak Haiti due to security).", "Estimated immediate impact of April tariff announcement:", "Channels of transmission:", "Long-term trend and productivity:", "Notable exception:", "Social and distributional stakes:", "Debt and fiscal targets:", "Natural disaster impacts:", "Insurance and risk transfer:", "Labor market and inclusion:", "Potential productivity gains from reforms:", "IMF membership and perspective:", "Core objective: foster resilient and inclusive growth that sustainably raises living standards by:", "Fiscal policy guidance:", "Exchange rate regimes and currency unions:", "Sovereign wealth and contingency funds:", "Multi-layer insurance framework recommended:", "Address rising reinsurance and domestic insurance premiums that reduce private coverage and increase government fiscal exposure.", "Raise total factor productivity and boost investment in physical and human capital.", "Key structural obstacles in ECCU and broadly in the Caribbean:", "Regulatory simplification and digitalization:", "Improve access to finance:", "Seize renewable energy transition opportunities:", "Invest in human capital and bridge skills gaps:", "Boost infrastructure investment:", "IMF engagement modalities:", "Regional examples of IMF support:", "Capacity building and CARTAC:", "Imperatives for Caribbean policymakers:", "IMF commitment:", "[Nigel Clarke](https://www.imf.org/en/about/senior-officials/bios/nigel-clarke)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2025/06/10/dmd-clarke-cdb-speech-june-10/index.md", "json": "/en/news/articles/2025/06/10/dmd-clarke-cdb-speech-june-10/index.json", "bundleManifest": "/en/news/articles/2025/06/10/dmd-clarke-cdb-speech-june-10/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T03:55:30.185Z" }