Business View Caribbean | Volume 8, Issue 10

7 BUSINESS VIEW CARIBBEAN VOLUME 8, ISSUE 10 A n effective response to the post Covid-19 economic situation must include significant and broad debt reduction for all developing countries, including vulnerable middle to high income states. This was one of the prescriptions put forward by CARICOM Secretary-General Her Excellency Carla Barnett as she participated in a panel discussion during the World Leaders Summit Dialogue on Inequality at UNCTAD XV in Barbados on Tuesday 5th October. Speaking on the theme of the discussion “Is the COVID-19 crisis really a game changer?” Dr Barnett further stated that debt reduction should specifically address debts built up due to COVID-19 expenditures and climate change adaptation. The CARICOM Secretary-General said that the meeting provided an opportunity to highlight to the global community the issues and concerns of Small Island and Low-lying Coastal Developing States (SIDS), as well as to identify some of the measures that could be taken by the international community to support efforts to build resilience and promote sustainable development among SIDS. She pointed out that SIDS experienced GDP contraction in 2020 at about three times the global rate. “We applied funds that were budgeted for other purposes to meet the needs of the health sector for PPEs, medical equipment, testing supplies and vaccines. We shifted funds to meet basic social safety nets. We repurposed loans and borrowed additional funds. Already high debt burdens grew even higher,” Dr Barnett pointed out. Dr Barnett said that while the G-20 Debt Service Suspension Initiative (DSSI) which allowed DEBT REDUCTION FOR DEVELOPING COUNTRIES MUST BE PART OF COVID-19 ECONOMIC SITUATION developing countries to temporarily suspend debt service payments to their official bilateral creditors had potential, it did not cover all middle to high income developing countries, many of which are SIDS. “New debt arising from the need to address the COVID-19 crisis together with the existing debt stock will continue to appropriate a significant proportion of public resources in debt repayments, while strangling critical infrastructural public investments required for economic rehabilitation,” the Secretary-General stated in making a case for debt reduction. The situation was even more challenging for many SIDS as they cannot access multilateral and bilateral concessional aid financing because of their relatively high per capita income status. OPENING L INES