Watch your spending IMF warns

by Sheron Garraway

The International Monetary Fund (IMF) report has revealed that there is growing concern about Caribbean people who continue to put themselves in financial debt.

The information comes in a report on Eastern Caribbean Currency Union (ECCU) countries, as reported from the Eastern Caribbean Central Bank (ECCB) by the International Monetary Fund (IMF). {{more}}

The report shows that of the 25 emerging countries around the world with high debt, six were ECCU countries with four at the top: Antigua, Dominica, St. Kitts and Grenada.

St. Vincent and the Grenadines and St. Lucia round out the complete list of six countries named.

The report states that public debt has risen in most countries averaging nearly 115 percent of the Gross Domestic Product (GDP). It reveals that high debt levels hinder growth hence the reason the St. Kitts and Nevis sugar industry was closed and personal tax was introduced in Antigua.

It was however noted that there have been major cutbacks in foreign aid, and that national disasters continue to threaten the Caribbean.

“Despite a very damaging hurricane season, economic activity remained robust in 2004 and is expected to continue growing in 2005,” the report stated.

“Growth has been driven by construction and sharp revivals in tourism. While the impact of hurricane Ivan on Grenada was devastating, there was limited damage to the remaining ECCU countries which grew by an average of 4 percent.”

It was also noted that visitor arrivals from the United States and the United Kingdom remain strong and would continue to grow. Inflation remains low while external currency reserves have risen though oil prices are “likely to remain at a very high level.”

The IMF also warns of trade preferences for bananas and sugar exports eroding, global interest rates rising and official development assistance to the region declining. In that light it advises that ECCU countries need to adapt to the changing times.

The report however pointed out that there are opportunities for the region. The IMF advises that more Caribbean countries should train their human resources (people) in non-traditional job markets so there is a wider range of expertise.

ECCU countries were also encouraged to increase links between tourism and agriculture as well as the diaspora so that regional and international cooperation would play a crucial role in development.