11th EDF Agreement and IMF Economic Outlook Report

In spite of the hacking of the Government’s website, whether by ISIS or others unknown, Prime Minister Gonsalves and his government must still feel fairly optimistic with the events of the last week or so, at least where the economy is concerned.{{more}}

There was the signing by the Prime Minister of the 11th EDF Agreement to the tune of EC$21 million, with the European Union, represented by its Ambassador to the Eastern Caribbean Mikael Barfod. The focus of this Agreement, which succeeds the 10th EDF, the focus of which was health, will be on rural infrastructure, roads especially, but not solely. This essential part of our infrastructure has been under much public scrutiny, including in the political sphere, so there is no doubt that the Government must feel relieved to be provided with resources to address this critical need.

The second area of optimism also has political ramifications. It relates to the release by the International Monetary Fund (IMF) of its 2015 Report, specifically the section on “The Regional Economic Outlook for the Western hemisphere”. It is no secret that the economies of almost all of the countries in the Western Hemisphere continue to take a battering, with the tiny vulnerable countries like ours in the Eastern Caribbean under great pressure to generate growth and development.

This has become a battering ram in the political field in the sub-region and government after government have been facing strong criticism from opposition circles over their apparent failure to lead their countries out of the economic woods. The Gonsalves government in particular has been challenged repeatedly by the opposition over the accuracy of its economic reports and forecasts. It has been accused of “wrecking the economy”, an accusation repeated frequently by Opposition spokespersons and supporters on radio and via social media.

There is no doubt that economically, SVG and the rest of the Caribbean, with very few exceptions, are struggling to stay afloat and concerns about their economic performance are quite in order. However it is difficult to square the dire picture painted with the data from reputable sources, including the Eastern Caribbean Central Bank (ECCB), the World Bank and the IMF.

The IMF Report mentioned above has now given lie to the oft repeated assertion that our country is one of the worst performers in the Eastern Caribbean where economic matters are concerned. In fact, it demonstrates the very opposite, and predicts that while the economic outlook for the region as a whole for the next two years is far from rosy, SVG is expected to be among the better performers in 2015 and 2016.

Thus, according to the IMF, real growth in Gross Domestic Product (GDP) for the entire Latin America and Caribbean region is predicted to be 1.3% in 2014, 0.9% in 2015 and 2.5% in 2016 with the comparable figures for the ECCB countries being 1.7%, 2.0% and 2.1%. The relevant figures for SVG are 1.1% in 2014, 2.1% in 2015 and 3.1% in 2016. Similarly, inflation rates in St Vincent and the Grenadines are predicted to be among the lowest in the area. There is a concern though about high deficits on our current account balances.

The statistics do not indicate that we are sailing smoothly, but that there is need for continued efforts to generate economic activity and provide for the needs of the population. They also certainly do not support the gloom and doom scenario propagated in some circles. Let us not mislead in our critical analyses, but use the facts as they are and search for sustainable solutions to our problems