Caribbean Corner

1. The Caribbean and IMF Working Together
Christine Lagarde

In this article, originally published in the Jamaica Gleaner on November 15, 2017, the IMF’s Managing Director emphasizes the need for Caribbean countries to overcome the challenges arising from domestic imbalances and natural disasters to secure resilient and inclusive growth and reduce inequality. She notes the IMF’s ongoing and evolving partnership in providing economic surveillance, financial support and capacity building.

Read full article here.

2. Economic Prospects are Generally Improving, although a few Economies are Hard Hit by Hurricanes
Mark Lutz

Caribbean economic prospects are generally improving; growth is picking up in 2017-18, with public finances slowly improving, and external current account imbalances slightly narrowing. However, a couple of economies, notably Antigua and Barbuda and Dominica, were especially hard hit by hurricanes last September, which hurt their economic prospects in the short-to medium-term.

Read full article here.

3. Country Briefs

a. The Bahamas: Restoring Fiscal Sustainability and Growth
Qiaoe Chen and Fabian Valencia

A sharp increase in the public debt burden over the past decade has reduced the policy space to respond to adverse circumstances. Fiscal consolidation is critical to restore fiscal and external buffers. Adopting an effective fiscal anchor through a rule would enhance budgetary discipline going forward and reduce policy uncertainty. Fiscal consolidation should be complemented with a decisive effort to undertake structural reforms to lift growth, improve standards of living, and ultimately support public sector sustainability.

Read full article here.

b. Sovereign Debt Restructuring in Belize
Joel Okwuokei and Bert van Selm

In March 2017, Belize completed a sovereign debt restructuring which reduces the net present value of its external debt to private bondholders by about 28 percent. Public debt remains high and, notwithstanding the government’s commitment to maintaining a primary surplus of 2 percent of GDP for three years, further fiscal adjustment is required to put debt on a clear downward trajectory. Fiscal consolidation could be supplemented by structural reforms to foster growth.

Read full article here.

c. Guyana: Becoming an Oil Producer by 2020
Abdullah AlHassan

The development of recent oil discoveries has the potential to transform Guyana’s economy. It is important that the government establish institutions and rules that make the best use of this windfall, sustainably promoting development while preserving competitiveness in traditional export sectors.

Read full article here.

d. Dominica: Recovering from Hurricane Maria
Alejandro Guerson and Alla Myrvoda

Hurricane Maria swept over Dominica leaving behind loss of life and unprecedented destruction. The international community responded with immediate assistance. The success of the reconstruction effort will depend on the government’s prioritization, planning, and sequencing of action, as well as the availability of sufficient financing on appropriate terms.

Read full article here.

e. Trinidad and Tobago: Restoring Macroeconomic Stability
Abdullah AlHassan

Sharp and protracted adverse shifts in fiscal and current account balances, stemming from persistently lower prices and output declines in the energy sector, call for policies to promote sizeable adjustment. Adopting structural reforms is critical for enhancing growth and diversification.

Read full article here.


a. Bank Consolidation in the ECCU: Improving Efficiency and Enhancing Stability
Fabio Di Vittorio

Banks operating in small undiversified economies must face the challenges caused by highly correlated economic sectors and volatile business cycles. A forthcoming paper by IMF staff finds that limited diversification of bank portfolios explains higher levels of NPLs, higher earnings volatility, and higher probability of bank bankruptcy in the ECCU region. The researchers also simulate indigenous banks’ mergers and identify the conditions under which consolidation of the regional banking system could contribute to enhancing regional financial stability.

Read full article here.

b. Financial Interconnectedness in the Caribbean
Elie Canetti

The global financial crisis (GFC) of 2008-09, including, in the Caribbean, the CL Financial Group crisis, heightened the awareness of risks from financial interconnectedness. The IMF worked with regional authorities to map financial interconnections among banks, insurers and sovereign governments in the Caribbean, and then subjected the findings to simulated financial and economic shocks. The main aim was to understand how such shocks could propagate through the Caribbean financial system and which financial sectors were either the most likely to propagate, or the most vulnerable to, financial spillovers within the system.

Read full article here.

c. Addressing Problem Loans in the Caribbean
Dmitriy Kovtun and İnci Ötker

A well-functioning, stable financial system can help unleash economic growth and mitigate risks, by providing access to finance and a diversity of tools to cushion against shocks. Elevated levels of problem loans in some Caribbean banking systems since the global financial crisis are holding back the growth potential and posing financial stability challenges to the region. A multifaceted approach is needed to solve the bad loan problem and put the financial system on a better footing to support the region’s growth and resilience objectives.

Read full article here.

5. Recent and Ongoing IMF Activities

a. CARTAC—Breaking New Ground on Gender and Inclusion
Celeste Kubasta and Wendell Samuel

The public service in the Caribbean is mainly dominated by women, requiring uniquely Caribbean solutions for gender and inclusion. CARTAC has been leading the way, providing gender sensitive training in budgeting, internal audit and inclusive growth. Looking ahead, further efforts will help build capacity to implement and monitor gender supportive policies and foster inclusive growth.

Read full article here.

b. Regional Leaders Debate the Caribbean's Future
Abdullah AlHassan

The region’s heads of state, finance ministers, central bank governors, private sector representatives, prominent academics, media, and international organizations explored options to address crime and youth unemployment, fiscal policy and political cycles, and financial stability and growth tradeoffs.

Read full article here.

c. Caribbean Policy Options: Fiscal Rules and Disaster Risk Financing
Leo Bonato and Bogdan Lissovolik

As has now become a tradition, two joint IMF-World Bank seminars were held during the 2017 Annual Meetings, on fiscal rules and natural disaster risk financing. The first seminar discussed the challenges and drew early lessons (from Jamaica and Grenada) of fiscal rules, highlighting the value of simple combinations of expenditure and deficit rules, stakeholders’ buy-in, and effective communication. The second seminar advocated developing a pro-active approach to natural disaster risk and financing management, through: using multiple instruments (fiscal, insurance, and financing) while linking these to pre-agreed disaster response and resilience-enhancing plans; incorporating natural disasters in macroeconomic plans and the DSA; augmenting insurance and external financing; and IFI backstopping as re-insurers of last resort.

Read full article here.

6. Selected IMF Reports and Publications

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January 2018, Volume 10

1: The Caribbean and IMF Working Together

2: Recent Economic Developments and Prospects

3: Country Briefs:

4: On the Radar:

5: Recent and Ongoing IMF Activities

6: Selected IMF Reports and Publications

Western Hemisphere Department, The Caribbean in the IMF

The International Monetary Fund maintains a strong partnership with the Caribbean region, with dedicated country teams in its Western Hemisphere Department, as well as staff in other departments. With a total population of 40 million and a cumulative land area of just over 1 million square miles, the region consists of multiple island nations in the Caribbean Sea and the surrounding coasts. Its people comprise ethnic groups from four continents. Mostly tourism- and natural resources-based, many Caribbean economies have experienced low growth and high public debt since the global financial crisis and are vulnerable to natural disasters. These island states have very diverse income levels. In 2016, GDP per capita ranged from US$23,640 in The Bahamas to US$4,475 in Guyana.


2017 High Level Caribbean Forum

IMF Caribbean Essay Contest

IMF Managing Director Christine Lagarde and essay contest winner Kara John from the University of the West Indies, Cave Hill Campus, Barbados


Abdullah AlHassan
Joshua Charap
Qiaoe Chen
Malika El Kawkabi
Mark Lutz
Wayne Mitchell
Lulu Shui
Sheng Tibung

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