by Ambassador Odeen Ishmael of Guyana at the meeting of the Latin American
Council of the Latin American and Caribbean Economic System (SELA)
Caracas, November 27 2008
Posted November 27th. 2008
Mr. Chairman, Ministers, Permanent Secretary of SELA, Ambassadors, Heads of Delegations, Ladies and Gentlemen.
This meeting of the Latin American Council of SELA is currently considering for approval a declaration on the international economic crisis with special reference to Latin America and the Caribbean.
As I give Guyana's support to this declaration, I want to touch briefly on two important inter-related issues which have bearing on this declaration.
The first issue deals with the current global economic and financial crisis, the impact of which is predicted to be significant and long lasting.
As you will recall, we have had intense discussion on this subject here at SELA quite recently. In brief, I want to inform you about its current impact on the Guyanese - and to an extent - on the economy of the Caricom sub-region.
Despite the recession in the developed world, Guyana has been spared the ravages that many other countries have encountered and will end the year with a positive growth rate of about three percent, which is slightly below the projected rate.
Guyana's economy has not experienced any significant decline, although it may be affected in the future by lower remittances, not as much demand for our products, less inflow of investment and reduced revenues from tourism. This situation is similar in the Caricom member-states, and therefore the entire region can be negatively affected as the crisis reaches the real economy.
The resulting financial issues may be solved by stimulus packages, but when the countries are experiencing fiscal deficits that are already large, these deficits would expand further and, probably, can be inflationary.
As the global crisis prolongs itself, a thorough analysis of how the global prices will impact on our economy will have to be made before an appropriate strategy could be implemented. This of course must involve discussions between the government and the private sector - which the Guyana government surely intends to do on an on-going basis.
And at the regional level, Caricom will have to move faster to build its single market economy since a single economy, well structured and managed, would be better able to withstand a global recession than twelve individual economies, as currently exist.
It is difficult to see any positives arising out of the current global economic and financial crisis. But one glimmer we are beginning to see is that some Caribbean-owned private businesses located in the United States are repatriating funds to the sub-region because their owners realise that with the recession, they could lose their capital in the US. They are taking this action even though they may obtain a lower rate of return of investment on their capital.
And unlike what has been occurring in the United States and many other developed countries in Europe and elsewhere, there is no fear in Guyana and the rest of Caricom of any major collapse in any of the financial sectors since they are not very integrated into the world's financial market.
The other inter-related matter relates to the problem of natural disasters in our region and its impact on the other crisis - that is, the declining food supply and its rising cost to the consumers.
Despite the optimistic view that the global economic crisis may not paralyse the economies of Caribbean, major problems persist in the sub-region. These have been compounded by a series of recent natural disasters which have caused serious problems in some of the member states of SELA. Hurricanes and accompanying serious floods this year have wreaked havoc in Jamaica, Cuba, Haiti and the Dominican Republic. These four countries need tangible assistance.
While the G8 countries have been working out ways and means to rescue the economies of the very rich nations, they should, in all morality, pay attention to those in real need and render immediate economic assistance to these four much poorer countries battered by the recent natural disasters.
Only quite recently, we discussed here at SELA in great detail the results of the June high level meeting of the FAO held in Rome in the light of the decline in food supply and the resulting spike in prices. As we noted, the FAO meeting set out a worthy plan of action. But that plan of action requires financing. At the FAO meeting, ambitious financial pledges or US$11 billion were made by the developed countries to set it in motion. Around the same time, leaders of the G-8 also pledged an estimated US$22 billion to address the food crisis in poor developing countries where some 900 million persons now face extreme hunger and poverty on a daily basis. But these pledges have not produced the promised funds. It is downright scandalous that less than 10 percent of those pledges have materialised to assist those who have the greatest need.
Just a few days ago, Guyana's ambassador in Brussels, who is the coordinator of the 15-member CARIFORUM Group within the African, Caribbean and Pacific (ACP) states, requested that the four most affected Caribbean countries - Jamaica, Cuba, Haiti and the Dominican Republic - must be specially included in the European Commission's proposed one billion Euros "Food Facility". Expenditure of this food aid programme is currently a subject of intense debate between the European Union Parliament and member states of the European Council.
This facility is meant to offer temporary relief as a rapid response to the soaring food prices that have caused economic, social and political upheavals since the latter part of 2007 among several developing countries.
Here, at this important forum of the Latin American Council of SELA, I reiterate this call for economic assistance to these four most affected countries and urge this regional organisation to give its support to the proposal.