June 11, 2004
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Honorable Prime Ministers, Respected Governors, Ladies and Gentlemen:
1. Governor Williams, thank you for this opportunity to address our distinguished audience. As co-organizers of this Caribbean Seminar, it is a pleasure to welcome you on behalf of the IMF. Looking around the hall, I am pleased to see representatives from different walks of life—senior policymakers, leading academics, labor unions, the press, the donor community, and others from civil society. Such a large and diverse audience is appropriate as many of the issues that we will be discussing could have important implications for the region's economic structure and its future evolution. However, before making a few remarks on the agenda ahead of us, allow me to take a moment to express my sorrow on the passing of the late Prime Minister of Dominica, the Hon. Pierre Charles, who launched his country on an enduring reform path and who we will miss today.
2. As you will have noticed from the program schedule, the agenda for the coming two days is quite ambitious. This is deliberate and should give enough time to discuss and debate the main challenges facing the region. The aim of this conference, and I hope this can be achieved, is that at its conclusion, a convergence of views can emerge on the options to take the region forward.
3. The Caribbean region is, of course, a diverse group of countries, both in terms of culture and the nature of their economies. Populations range from 8½ million in the Dominican Republic to just over 45,000 in St. Kitts and Nevis. GDP per capita also varies widely—from a high of over US$16,000 in The Bahamas to only US$570 in Haiti. At the same time, the countries in the region share many common features and strengths, including a strong commitment to the principle of democratically elected governments. Most islands have achieved a standard of living and boast social indicators that compare favorably with the rest of Latin America and many other developing countries.
4. Despite these strengths, average GDP growth in recent years in the Caribbean has been low-less than 2½ percent in the 1990s, as compared to an average of over 4 percent for all developing countries. Unemployment rates are high-ranging from 10 to 25 percent. And while countries have borrowed—sometimes heavily—to meet their growth objective, the return on investment has not been sufficiently high, as seen in the sharp increase in the average public debt-to-GDP ratios in recent years. Social and income inequalities, I know, are also sources of concern for many of you. Overall, the Caribbean economies seem not to be performing at their full potential. Why is this the case?
5. It is true that the rapid pace of globalization has challenged the region. The small size of the economies is sometimes seen as a deterrent to exploiting scale economies in production. The islands have also endured many recent shocks that are beyond their control. The recent tragedies in the Dominican Republic and Haiti have painfully illustrated the vulnerability of the region to natural disasters. In addition, the region has also experienced shocks from the dismantling of preferential trade agreements, the reduction in grants, and the September 11th terrorist attacks that hurt the tourism sector.
6. By any measure, this is a daunting list of challenges. But globalization also creates opportunities, principally, the opportunity of access to a global market place that can be enormously beneficial for small open economies seeking to exploit economies of scale. The goal is how to exploit these opportunities and allow the Caribbean nations to realize their full economic potential. Thus, the region is at a critical juncture in its development process. With the right policy conditions, I am confident that the region would achieve its own distinct niche in an integrated world economy and prosper . The goal is clear: to impart more flexibility to economies and this may require revisiting old paradigms, re-orienting traditional sectors, designing new reform strategies and building new institutions.
7. It is my hope that, by providing a forum for the discussion of these issues, this meeting will help to set the stage for the emergence of a comprehensive strategy for the Caribbean region that will allow it to realize its full potential. We at the International Monetary Fund stand ready to help the region achieve this goal. While the international institutions represented here can and will play a role in the region, the region's future direction must come from the region. Without national ownership, even the best designed strategies will not succeed. Thus, broadening the public's understanding of the challenges and choices facing the region is important in generating a consensus for some of the difficult changes that lie ahead for the region.
8. In closing, I would like to say a few words of congratulation to our co-sponsors, the Central Bank of Trinidad and Tobago that is celebrating its 40th Anniversary. As you are aware, in that time the Central Bank has grown to be one of the most advanced and respected within the region. I would like to convey the best wishes on this occasion to the current Governor of the Central Bank, Ewart Williams, from his many friends and former colleagues in the Fund—including several of the Fund staff here today. We wish the Central Bank and its staff well for the coming 40 years, and hope that participants enjoy fruitful and enlightening discussions throughout the conference that help the Caribbean region move forward.
Thank you.
