Tue | Jun 25, 2019

CARICOM member states US$99M in contribution arrears

Published:Wednesday | January 16, 2019 | 12:00 AMAvia Collinder/Business Reporter
Irwin LaRocque.
This file photo shows the New Kingston business district. Jamaica accounts for 30 per cent of the contribution arrears to the Caribbean Community.
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Members of the Caribbean Community (CARICOM) budget committee, which met in Guyana last December, found that members states are in arrears to the tune of more than US$99 million as at May 31, 2017, in terms of their contributions.

A paper, titled 'Evaluation of methods of financing the budget,' looked at the possibility of levies on island revenue streams, including betting and gaming as well as tourist arrivals, but also the possibility of introducing a new rule suspending the voting rights of members who are in arrears.

Jamaica, meanwhile, is proposing a new method of assessment which would result in a five per cent reduction in its contribution while seeing increases of between 0.04 per cent and one per cent for some other member states.

Available data on member states' contributions to CARICOM as at December 31, 2016, revealed that 13 of the 19 countries had various levels of unpaid contributions.

Jamaica accounts for approximately 30 per cent; St Vincent and the Grenadines, 20 per cent, Grenada, 13.5 per cent; and Antigua and Barbuda, 12.4 per cent. These four countries accounted for 85 per cent of the unpaid contributions.

 

JA's CONTRIBUTION

 

The paper noted that Jamaica is working on becoming current in its contributions and addressing the arrears it has accumulated.

However, the level of unpaid contributions from a few member states remain significant. In 2018, the CARICOM Secretariat said it would continue to critically examine ways to facilitate cost containment and reduction.

The countries with the highest arrears as at May 31, 2017, were Jamaica with US$40.97 million, or just over 41 per cent of total contribution owed, followed by Suriname, Haiti, Antigua and Barbuda, and Guyana. Those five countries were responsible for US$69.422 million or 69.88 per cent, of total arrears.

At the December meeting Jamaica delivered a paper pointing out that there are numerous reasons in favour of adjusting the contribution formula to support the budget.

"The formula is dated and does not reflect current realities of member states, and the percentage share of contribution should not be so unequally proportioned that a non-paying member state, whatever the reason, will significantly influence the functioning of the Secretariat," it said.

Jamaica and Trinidad currently provide above 20 per cent of contributions each, or together nearly half of all contributions.

 

VARIABLES

 

The paper on the new model, authored out of Jamaica, suggested use of variables including gross domestic product (GDP) per capita and debt ratios. It noted that a high debt-to-GDP ratio "suggests that the country will use a greater percentage of its revenue to service its debt relative to another country with a lower debt-to-GDP ratio. The model assumes a negative relationship in calculating the share of contribution to the budget."

Under the revised programme, Jamaica's contribution would fall to 19 per cent, down from 23 per cent.

CARICOM's proposed budget for 2019 shows the need for finance of EC$51.40 million from member states. Support from international development partners in 2019 is expected to provide an additional sum of EC$30.29 million.

Reports emanating from the budget committee meeting last December note that in the latter part of 2018, some member states made significant efforts to reduce contribution arrears and this was reflected in an improved cash flow, together with lower level of overdraft utilisation and interest. Jamaica adhered to the agreed payment plan and reduced its arrears, as did Dominica. Guyana made advance payment on its annual assessment.

The CARICOM reports are inclusive of the proposal for consideration of a new rule which addresses arrears.

A proposal was made that in the event that a member does not pay by an agreed time and does apply for approval by the Council of Ministers for a deferral in part or all of a member's contribution, then the secretary general should be required to so inform the council. The rules which will then apply will require that, once the Council has been informed, the member's voting rights and access to services will be suspended.

avia.collinder@gleanerjm.com