By Kimberly Ramkhalawan
kramkhalawan@caribmagplus.com
November 2, 2021
Inflation continues to be a major grappling point for Caribbean Economies even as it factors in the effects of the COVID19 Pandemic. No other group knows the effects of this than Central Banks. They continue to play an important role in mitigating the effects of the financial downturn that has come with the current COVID 19 Pandemic. And while many nations have restructured their debt policies while providing a suite of incentives that encourage a measure of economic growth, Central Banks believe staving off inflation can only be for a certain period.
Discussing what they can do to better equip their nations as small island developing states during this time, regional governors spoke to policies that can put into effect to help buffer the risks associated during a Governor’s forum hosted by the Trinidad and Tobago Central Bank titled ‘moving on from Pandemic Response to Resilient.
In his opening remarks, Governor for St. Marteen and Curacao, Richard Doornbosch, says designing policy measures to ensure that recovery after the pandemic is inclusive and sustainable. He adds this applies even more to nation’s that have had pre-existing conditions. and while the recipe for inclusive and sustainable growth is not going to be much different from before the pandemic, the level of urgency will differ and room for fiscal policy will be lower.
To Timothy Antoine, Central Bank Governor of the Eastern Caribbean Central, the most effective policies and lessons comes not from economic or financial perspectives but rather collective action as a region, something he says is seen in how Caribbean nations have worked together in getting its people vaccinated. This he says borrows from pandemic economics which he says means to contain the pandemic.
The pandemic has forced institutions to introduce debt repayment policies, popularly loan moratorium or better known as loan payment deferral programmes, a policy that many have been advised against. But Antoine says his Bank believes such support is pivotal at this time, describing it as a shock absorber important to tourism based economies that won’t see any kind of recovery until perhaps 2024.
Citing some of the programmes the eastern Caribbean bank has been introducing, Antoine says the partial credit guarantee scheme, targeted at small businesses looks at giving entrepreneurs the chance to recalibrate their business models while getting into digital economies, a currency so far only The Bahamas and the Eastern Caribbean have begun to utilise.
Guyanese Central Bank Governor Dr. Gobind Ganga in expressing confidence that growth will return to Caribbean economies whether commodity based export or tourism, he says this can only come after some level of diversification has occurred while human capital be retooled and reequipped with new skills and training applicable to the times.
CBTT’s Governor Dr. Alvin Hilaire says keeping inflation at bay has been a challenge to his administration, while managing monetary policies that encourage economic growth and stability, as changes are happening daily. He notes that inflation has been ongoing globally, and the usual fix of tightening monetary policies post price rises may not work this rounds as Central Banks are now faced with the responsible role during a pandemic.
This dilemma he says revolves around the need to support an economy, despite its move to lower reserve requirement, reduced its discount rate tremendously which has boosted liquidity fostering growth to an extent, while at the same time looking carefully at inflation taking over.
Hilaire instead says it is about the time the region worked collectively in achieving its comparative advantage, whether be in tourism branding that sells the region as one, to utilising each other for its goods and services across the board rather than depending on foreign supply chains.
This year’s Governor’s Forum came on the occasion of the 52nd Annual Monetary Studies Conference 2021.