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LATEST ISSUE

December, 2018
Caribbean Economic Report, December 2018
Bahamas Central Bank highlights importance of fiscal prudence in reducing pro-cyclicality, Barbados economy contracted 0.5% from Jan-Sept 2018, Cayman delivers fiscal surplus nearly double its

Caribbean Economic Report, October 2018
External public debt expands 31% y/y in Bahamas, Barbados targets 6% primary surplus under IMF program, Cayman economy expands 4.0% y/y in Q1 2018, Remittances

Caribbean Economic Report, August 2018
Rising international oil prices stoke inflation throughout the region and induced a rise in , Barbados economy contracted in H1 2018 by 0.6%, Cuba's economy

Caribbean Economic Report, July 2018
Bahamas increased VAT rate takes effect July 1. Barbados announces fiscal adjustment of BBD1.2B. Cayman projects 8.4% growth in construction sector in 2018. DomRep continues broad-based

SPECIAL REPORTS

November 5, 2018
Marla reviews and analyzes recent development in the ECCU countries, offering insights into what is impacting growth, fiscal accounts, tourism, and projections for economic activity.

October 17, 2018
Marla reviews the most recent developments related to the announced closure of Petrotrin. This brief is a summary of information, data and statements related to

May 27, 2018
Marla reviews the most immediate challenges facing Barbados following the 2018 General Election. This Q&A reviews the impacts of fiscal overspending, why growth is low,

LATEST INSIGHTS

The National Investment Fund (NIF) bond issuance by government is consistent with government's plans outlined in the budget to finance its deficit through borrowing, drawdowns from the HSF, and divestment of state assets. The way in which this proposed TTD4 billion will be raised, poses some questions and issues, which Marla discusses in this Q&A.

S&P has revised the outlook downward on its sovereign credit rating for Trinidad & Tobago, citing macroeconomic risks and external imbalances and coinciding with my view that such imbalances may deplete external assets “faster than expected.” The rating was left at BBB+.

The IMF’s Article IV Staff Report on Trinidad & Tobago published in November 2017 validated Marla's view that around 2021 - 22, if everything continues as is, T&T may run into a Balance of Payments crisis, and have to ask the IMF for support.

MAKING A DIFFERENCE

Follow the key policies and initiatives Marla is working on to set the Caribbean on a more sustainable economic trajectory.

FISCAL RULES

The Keynesian approach to economic management assumes that higher fiscal spending stimulates growth. But in T&T, instead of running fiscal surpluses and saving energy windfalls, we continue to spend more, at times even incurring fiscal deficits and borrowing to spend when energy revenues are high. When energy prices decline, we are left with insufficient fiscal space or capacity to borrow and compensate for the attendant shortfall in energy derived fiscal revenues. But there is something we can do relatively quickly, to dampen the pro-cyclicality of fiscal policy and make it more counter cyclical…

CARIBBEAN TRANSFORMATION

The Caribbean has come to a point where after some 50 years of independence for most of us, we are in a state of socio-economic decline. And unless we are in a balance of payments crisis, and can appeal for IMF intervention, there will be nobody coming to our rescue. Many of us are classified as middle / upper middle / high income which means we are treated in a manner that is not appropriate for developing countries by the World Bank and other development agencies, an atrocity in itself. We need to recognize that we have to cause fundamental shifts in the way we run our countries as a matter of urgency, lest we deteriorate…

FOREIGN DIRECT INVESTMENT

Because in the Caribbean we generally run fiscal deficits, this behaviour drives deficits on the current account of the balance of payments. The net outflow of USD as reflected in the current account deficit, is financed on the capital account of the balance of payments, usually via sovereign debt and by foreign direct investment. It is argued that in the region we do not benefit from FDI to the extent that we should, based on concessions granted, inadequate transfer of knowledge, etc. We propose an FDI-driven growth model which does not rely on concessions. Instead, the foreign investor pays the usual corporate tax rate, and instead of…

FINANCIAL INCLUSION

While financial inclusion itself is not a sustainable development goal, it underpins 8 of the 17 SDGS including reducing poverty, income inequality, and gender inequality, so much so that the World Bank has a goal of universal financial inclusion by 2020, which is even more aggressive a timeline than the SDGS. Due to ‘de-risking’, as a region, the Caribbean is becoming increasingly financially excluded on a national level. Poverty levels are already around 40%. According to the World Bank, around 2 billion people (40% of the world’s adults, 50% of the world’s poorest) are unbanked. Over one billion women worldwide are…

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