Caribbean Economies Take Center Stage at Bank Headquarters

Ron Thomas Ministers from Caribbean nations with Wolfensohn and Kalantzopoulos.

The Caribbean Group for Cooperation in Economic Development (CGCED)¹ forum, held every two years since 1977, took place the week of June 8 under the sponsorship of the World Bank.

Barbados Prime Minister and CGCED Chairman Owen Seymour Arthur said that recent events had "cast a dark shadow" over the region and that the group would focus on policies to reposition the Caribbean economy to overcome its vulnerability.

Tourism, other service exports, and manufacturing are driving growth in the Caribbean region, though this growth is at a slower pace than that of the world market.

The loss of crucial export markets could damage already impoverished economies. The demise of traditional preferential trade arrangements (the WTO has ruled that banana and sugar trading arrangements with the EU must be amended by 1999) and the expansion of international competition, especially from Mexico, threaten to undermine the modest growth achieved recently.

Meanwhile, the World Bank is experiencing negative net transfer flows to the region.

This year's CGCED meeting focused on local and international partnerships as key to helping countries reduce their vulnerability. One of the proposals strongly endorsed by the group was increased participation by civil society in both the design and implementation of development programs. One example of how the Bank is involving civil society is in Haiti, where a World Bank poverty assessment is being disseminated in Creole to local non-governmental organizations and community groups.

A united regional approach to resolving the issue of economic vulnerability was another theme stressed by the CGCED. National delegations and donors alike agreed on the need to work together for common solutions to regional problems.

The World Bank reinforced its commitment to assist the Caribbean region, emphasizing growth, poverty-reduction, capacity-building and more region-wide programs.

The Bank's Country Director for the Caribbean, Orsalia Kalantzopoulos, stressed that Bank would seek to maintain its concessional lending flows, particularly to the more vulnerable countries of the region.

Over the next few months, the Bank will be looking at its country assistance strategies and lending programs to see whether it should resume lending to those countries that have graduated from the Bank or IDA, according to Kalantzopoulos.

"The level of poverty that exists, the effect of natural disasters, such as hurricanes, and single commodity export economies need to be taken into account for upcoming negotiations for IDA 12," she said, referring to 1999-2001 donor replenishment of the Bank's soft-loan window.

The World Bank's lending assistance to the region averages $150 million annually. But Kalantzopoulos noted that Bank assistance goes beyond lending amounts. For example, Guyana this past January qualified for $254 million (net present value) in debt relief under the Highly Indebted Poor Countries Initiative (World Bank News, January 8) launched by the World Bank and International Monetary Fund.

Director Vinod Thomas, who heads the Economic Development Institute, the Bank's educational wing, said that his department would increase the number of programs that build skills critical for modernizing economies and will adapt training to better meet the needs countries in the region.

Ahead of the CGCED meeting, the Bank on June 4 approved a telecommunications project that could significantly boost the economies of the Eastern Caribbean states. The countries participating in this project include the Commonwealth of Dominica, Grenada, St. Kitts & Nevis, St. Lucia, and St. Vincent and the Grenadines. The $10 million telecoms project is being supported with $6 million from a World Bank loan and IDA credits. The project will help the five participating governments set up an authoritative body to regulate the industry and institute new laws to make the sector more competitive.

The project will help these economies diversify more quickly, and will increase the use of data transmission—critical for businesses—and also create jobs in the service sector.

"If successfully implemented, this project will change the character of the economies," said Kalantzopoulos.

Reports on countries in the region prepared for the meeting can be found at www.worldbank.org/cgced/cgcedre. For more information, call Monica Echeverria-Cota, (202) 473-1315 or e-mail mecheverriacota@worldbank.org.