SELA and ACS organize meeting on debt burden in the Caribbean region

Caracas, February 24- The Latin American and Caribbean Economic System (SELA) and the Association of Caribbean States (ACS) will hold today the “Meeting of Experts on debt burden in the Caribbean Region”, in Port of Spain, Trinidad and Tobago.

The Permanent Secretary of SELA, Ambassador Roberto Guarnieri, underlined that this meeting will analyze the debt situation and policies for debt relief, focusing on differentiated approaches that respond to the particular characteristics of Caribbean economies.

The importance of the issue of debt burden or sustainability has been stressed repeatedly in various regional and global forums, including the Latin American Council of SELA, with particular emphasis on the situation of low and middle income countries in Latin America and the Caribbean.

While the issue of debt has been marginalized at the regional level, mostly as a result of the positive impact of the most favourable external economic conditions and the greater macroeconomic discipline, attained by the majority of countries since the 1990s and the beginning of the millennium, debt burden persists as one of the main problems being faced by the economies of the Caribbean subregion.

SELA, in accordance with the Panama Convention establishing the organization, is an intergovernmental regional body with the aim of providing a system of consultation and coordination for the adoption of common positions and strategies on economic and social matters and promoting cooperation and integration among its members. It was created in 1975 and is composed of 28 Latin American and Caribbean countries.

Some Caribbean economies report a debt/GDP ratio of more than 60%, revealing an almost unchanged fiscal vulnerability of this burden in terms of economic and social development for this group of countries, since debt burden has a major negative impact on economic growth.

Although debt can be used as a tool to improve macroeconomic performance and promote welfare, excessive debt accumulation can lead to a fiscally unsustainable situation, with severe negative effects on macroeconomic stability and economic growth.

In addition, the per capita level has deprived most Caribbean countries of preferential solutions for debt relief, in particular the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative.

The Meeting of Experts is intended to exchange experiences among the countries in the subregion as regards the subject of debt relief and disseminate information about this reality among countries and integration organizations in Latin America and the Caribbean.

Another objective of this meeting is to identify debt relief policies, particularly measures to promote investment and to spur economic growth.

The conclusions and recommendations are expected to be of benefit for affected countries and of strategic importance for the other Member States. After the Meeting of Experts, the final report will be sent to the Member States of SELA and relevant regional bodies, including the Association of Caribbean States.

The Permanent Secretariat of SELA prepared an analytical document entitled “Debt Burden and Fiscal Sustainability in the Caribbean Region,” which will serve as the basis for debates at the meeting in Port of Spain.

Speeches at the opening session will be delivered by Ambassador Alfonso Múnera, Secretary-General of the ACS, and Ambassador Roberto Guarnieri, Permanent Secretary of SELA. The first session is entitled “Debt burden and fiscal sustainability in Caribbean countries” and will be focused on the presentation of the base document of the Permanent Secretariat of SELA on the issue. The next session will cover national experiences for overcoming debt burden. Then, participants will present the issue of fiscal adjustment and measures to stimulate economic growth at both regional and multilateral levels. The conclusions and recommendations will be discussed at the end.

This Meeting of Experts is part of the activities foreseen in the Work Programme of SELA for 2014, adopted by the Latin American Council. Such Programme includes, among others, projects and activities to be developed during 2014 to support integration and policies for economic and social development in Latin America and the Caribbean.

According to the Panama Convention, Article 5, SELA aims to support the integration processes of the region and encourage coordination among them, or with Members States of SELA, particularly with respect to those activities aimed at promoting greater harmonization, duly respecting the commitments made within the framework of such processes.