Caribbean Development Bank ready to help on COVID-19 fight
Published:Thursday | March 26, 2020 | 12:13 AMChristopher Serju/Gleaner Writer
THE CARIBBEAN Development Bank’s (CDB) has US$90 million in financing as well as other funding available which it is prepared to make available to regional states, at very reasonable interest rates, to bolster their efforts to cope with the ravages of the novel coronavirus (COVID-19).
“COVID-19 is all-embracing, and all our DMCs (donor member countries) are faced with the challenges at the same time. The CDB’s financial and technical assistance interventions in the current situation will be targeted towards the most vulnerable within our societies, and we are giving the highest priority to strengthening social safety nets. As it relates to financing, we have already identified some US$90 million which we are resourcing and which we had committed earlier, and other resources which are yet to be committed, and these come from our ‘soft window’. We are talking about very low cost financing with long-dated repayment periods,” President of the CDB, Dr Warren Smith, disclosed last Friday.
Dr Smith was a participant in the virtual Vice-Chancellor’s Forum, hosted by The University of the West Indies (The UWI) on its UWItv platform under the theme ‘Caribbean Unity of Plurality – the regional response to COVID-19’. The forum featured regional experts discussing the implementation and impact of various national policies across the region in dealing with the COVID-19 pandemic.
HARD HIT FOR THE REGION
While the global viral explosion qualifies as an external shock, it is unlike any other in living memory in the region, which has been affected by natural disasters, the global recession of 2008, SARS, Chikunguna or the Zika virus. These negative externalities have disproportionately affected the tourism industry, which is the leading economic sector for most of the region, and which will be the hardest hit by the current threat.
“Given the high degree of uncertainty, no revised estimates have as yet been provided for the global economy, but it is expected that one to two per cent could be shaved off estimates of global growth; and this extent of GDP decline will depend on the duration of the pandemic, and also on the effectiveness of policy responses.”
A critical issue for the region will be the extent of foreign reserves resilience in the wake of the pandemic, given that most economies are small, open and heavily dependent on a very narrow range of goods and services to generate their foreign exchange earnings. In fact, for some, travel receipts are the largest source of foreign exchange inflows.
“Tourism accounts for over 50 per cent of exports in The Bahamas, Barbados, and in Jamaica. Travel receipts are likely to be severely impacted, and the resilience of our foreign reserves will depend on whether countries have foreign exchange buffers, the duration of the travel impact, and the export concentration in relation to travel receipts,” the CDB president said.
Those countries that have very little diversification in their economic sectors are going to be the most at risk, in particular tourism-dependent economies. They will be impacted, as already happening in Jamaica, by a fall-off in visitor arrivals, closure of hotels, restaurants and other ancillary services which support the industry, and the loss of employment.
The CDB president posited that these impacts are likely to be felt well into the 2020-21 winter season, starting in November, due to slower recovery in source markets and a general fear of travel, among other factors.