Region urged to respond to difficult economic times

The Governor of East Caribbean Central Bank (ECCB) has said that a sense of realism must be brought to bear on economic and commercial activities in the Organization of East Caribbean States (OECS).{{more}}

Addressing residents of the OECS in a live telecast on Tuesday evening, Sir Dwight Venner said that there are situations where neither our societies nor our governments have any direct influence.

He said that the increases in oil and food prices, steel and other building materials, and the depreciating US dollar are problems being faced by all countries except, in the case of high oil prices, by the oil producing countries. “Since we all have the same basic problems, it will be difficult to plead special circumstances in our case. The bottom line is that we will have to lower our costs, adjust our expenditures, reallocate our assets to more highly productive activities and increase our productivity,” Sir Dwight said.

In the well received speech, which was also beamed by video-conferencing to all the bank’s agency offices, the Governor said that our “our individual and collective responses to these circumstances and challenges that will determine the future of our countries and of future generations.”

The Governor said a marked feature of the year 2007, which saw growth provisionally estimated at 5 per cent, was the steady upward movement of domestic prices. This was, by and large, a result of global increases in the prices of commodities, the continuing depreciation of the US dollar to which the EC dollar is pegged, shortages of local agricultural produce due to storm damage, and a scarcity of skilled labour in the construction industry, leading to higher labour costs.

The public sector debt to GDP ratio in the ECCU came down from 115 per cent at the end of 2004 to approximately 97 per cent at the end of 2007. This downward movement was directly associated with strong revenue growth facilitated by tax reforms. Public expenditures, however, continued to grow at a rapid rate and the region continues to be among the most highly indebted economies in the world, he said.

Looking forward to 2008, Sir Dwight said, “We need to conduct an audit of our current circumstances to determine the assets and liabilities, advantages and disadvantages, costs and benefits with which we start the new year.”

He encouraged the various elements in our societies including the government, business community, the financial sector, trade unions, civil society groups and individuals to recognise their basic responsibilities in the development process.

The Governor mentioned that the agreement in principle to the creation of an OECS Economic Union would, if pursued fully, considerably widen the economic and financial space, lower the unit costs of both public and private sector activities and increase the negotiating capacity of our countries.

Sir Dwight spoke about the need in our countries for the emergence of a new entrepreneurial class consisting of individuals who will set up small to medium size enterprises in the areas of information technology, finance, scientific, cultural and high-value services.

He recommended the provision of scholarships for talented students to attend leading institutions in the areas of business and technology, so that they can have access to the networks and supply chains which now dominate the global economy, as well as appropriate technical and vocational education and mentorship for the increasing number of young males who need to be included in the economic process.

He also encouraged the establishment of investment clubs in which groups of people can consolidate their financial and technical resources to invest in ongoing businesses and to start new ones. A breakthrough in this area, he said, will result in a major change in our business culture and economic environment.