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Minister of Finance Camillo Gonsalves. (iWN file photo)
Minister of Finance Camillo Gonsalves. (iWN file photo)
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KINGSTOWN, St. Vincent (CMC) — Caribbean Community (CARICOM) finance ministers held talks, on Monday, with the Director of the Western Hemisphere Department of the International Monetary Fund (IMF), Alejandro Werner as region seeks relief from the economic impact of the coronavirus (COVID-19) on their individual countries.

Finance Minister Camillo Gonsalves told a news conference, on Tuesday, that while the Washington-based financial institution had indicated it would make US$50 billion available through its rapid disbursing emergency financing facilities for low income and emerging market countries, the Caribbean would still be placed at a disadvantage.

“The idea is to come up with an entire range of solutions and then allocate those solutions to the entities best suited to do that job,” Gonsalves said, noting that Barbados, for example, which is in an IMF programme, “can negotiate with the IMF one and one about getting a little ease here and … a change in their conditions.

“So if you are in an IMF programme you have one lever you can ask the IMF to help you with. As you all know, St. Vincent and the Grenadines has not ever gone to the IMF during this government’s tenure in office, so we don’t have that lever.”

But he said the IMF has the Rapid Disbursing Facilities that provides for countries that are not in an IMF programme, not in a structural adjustment programme “and not following none of their conditions, but there is money available if you have a disaster that creates a balance of payment problem”.

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Gonsalves said that fund is usually applicable when countries face a natural disaster, such as an earthquake or hurricane “and they have something called the Rapid Credit Facility and the Rapid Financing Instrument and those monies are almost immediately available in the case of a disaster”.

He said the funds are sometimes available at zero per cent, which is the one Kingstown is eligible for, but must be repaid over 10 years, with a grace period of five years.

The other facility, which is for wealthier countries, has a fluctuating interesting rate and a shorter repayment period.

Gonsalves said that St. Vincent and the Grenadines had already drawn down on that Rapid Financing Instrument in the past, most recently in the aftermath of the 2013 flood that caused widespread damage here.

“So we are still repaying that … and by 2023 we would have completed the repayment,” he said, adding that “the IMF has conceded they would allow that instrument to be used in the context of the COVID-19 pandemic.

“However, it is not a lot of money because the Rapid Financing Instruments are limited to something called SDR (Special Drawing Rights)… and it is essentially pinned to the size of your economy. So if you have a small economy, you have s small quota,” he said, noting that in the context of St. Vincent and the Grenadines, “our rapid financing drawdown window is somewhere in the order of US$12 or US$13 million, but again we have drawn down some already”.

Gonsalves told reporters that the Caribbean and, more so, St. Vincent and the Grenadines, indicated to the IMF meeting that while the region is grateful that the IMF was considering the Rapid Financing Instrument in the context of the COVID-19 pandemic, it must also consider increasing the quota to small island developing states.

“Reason number one is that this pandemic is a serious thing that is going to cause a serious economic fall-out especially to countries in the Caribbean that are so heavily dependent on tourism.

“So we are going to be among the hardest hit states, because as I told you at the at the beginning, one-third to two-thirds of our economies is based on tourism. So we are going to take a very hard hit, so we would like the quota to be adjusted to allow us to draw down more money.

“The second reason, which we can’t forget, is that the two crises may dovetail. You have the COVID-19 pandemic, which is still increasing in our region — it has not yet peaked in our region — leading into hurricane season,” Gonsalves said.

“If, God forbid, our country or one of our neighbours was struck by a hurricane … while dealing with the COVID-19 pandemic that US$12 million drawdown won’t cut it.

“So we spoke to the IMF about them considering for these tourism dependent economies and increase in the Special Drawing Rights quota for these Rapid Financing Instruments,  because St. Vincent and the Grenadines is still repaying theirs, Dominica, which drew down theirs more recently, is still repaying theirs, so it limits what they can do”.

Gonsalves said that there is also “an immediate problem” facing the region with the tourism fall-off, noting “if there is a global recession that comes out of this we would also have a lagging challenge down the road when the effects of the global slowdown affect us”.

Gonsalves said that Caribbean countries are also urging the IMF to consider amending the Catastrophic Containment and Relief Fund — established to assist African countries deal with the Ebola virus a few years ago — to suit the needs of the region in the context of the COVID-19 pandemic.

“The case that we made to the IMF it is a good idea that you have created something to deal with public health emergencies. You’ve only had to use it in Sub-Saharan Africa, so you design it with Africa in mind. But now that we have public health challenges outside of Africa in developing countries that also need this debt relief when facing a public health emergency, you probably would want to consider adjusting the criteria for qualification to allow these small states that are heavily indebted and heavily dependent on tourism also to qualify under that programme”.

Gonsalves said that Werner has promised to further discuss the issues raised with his officials in Washington and Barbados Prime Minister Mia Mottley, who is also the CARICOM chair, “has undertaken to further that argument at the highest level of the IMF”.

7 replies on “C’bean finance ministers, IMF discuss aid in light of coronavirus”

  1. I hope the IMF take some time about making funds available, because they have never given SVG under the ULP money because they would have closed them down if they had looked into their modus operandi. I hope they will look very carefully at SVG before they give them anything.

    Just keep your eyes open for breaking news.

  2. I do not believe that most countries can act responsibly when it comes to loans. That includes most of the EU Government(s) and the entire USA. It sounds compassionate to pass out free money at this time, as Trump is doing (more for election purposes). Free money will not cure the virus nor bring the dead back to life. Free money actually makes things worse and in the case of our small Caribbean countries much, or most of that money will go to benefit the governments, (to include election campaigns) more than the people.
    I do not have the links because most are in foreign languages, but…
    Both Germany and Russia claim they are close to a vaccine for the virus. Germany said that in approximately 2-4 months they will have 1 billion vaccines ready. The USA offered Germany 1 billion dollars for the German company to move to the USA and said the vaccine will be expensive and Germany said “NO!” The vaccine is for everyone in the world, including those countries under US sanctions! Russia said about the same thing. Scientists in the “highly advanced” USA said it will be close to a year before they can develop a vaccine. I think most money in the USA is allocated to making bombs, weapons and developing ways to spy on everyone and sabotage and overthrow governments and economies rather than to do beneficial good for society.
    The world may be over-burdened with this crisis and I would suggest that beyond getting test equipment and hopefully a vaccine and equipment, that our government seek to otherwise find a way for us to help ourselves rather than to beg and demand that everyone else throw money at us and take care of us. At the moment because of US Sanctions, Iran gets NO HELP from anyone except, soon, China. Our helpless Caribbean Governments may find that world resources are going to be under tremendous strain and we will have to use our own brains and resources to help ourselves instead of always depending on the world to always bail us out.
    Even though Globalism has caused such “interdependence” maybe it is time we become an independent country instead of always being dependent.

  3. The MOTTO is to “fix the Roof when the Sun is shining, so as to be able to weather-the-storm if and when it ever comes” but no’ like Venezuela, the sun never comes out for you guys, because you are just plainly too dunce. Always looking for other people’s money to spend, be it in the form of high Taxes, Grants or Loans!

    The other trouble with you usurpers is that, sooner or later, you guys always run out of other people’s money!

  4. I suggest we look at other ways to support our country and people rather than begging for loans. I am all in favor of getting the medicine developed in Cuba that has shown to offer real help in the fight against this virus. We can also hope a vaccine vaccine from Germany or Russia comes soon. Now Australia claims they have a vaccine. The “highly advanced and developed” USA says they are still approximately a year away from having a vaccine and will charge a fortune for it and develop it ONLY FOR US CITIZENS.
    Please read the latest from Pepe Escobar, from Asia Times:

  5. Luann A Hadaway says:

    “However, it is not a lot of money because the Rapid Financing Instruments are limited to something called SDR (Special Drawing Rights)… and it is essentially pinned to the size of your economy. So if you have a small economy, you have s small quota,” he said, noting that in the context of St. Vincent and the Grenadines, “our rapid financing drawdown window is somewhere in the order of US$12 or US$13 million, but again we have drawn down some already”.

    Can we find out from Minister Gonsalves, how much of these funds were drawn by us and how much would we be entitled to now?

  6. Luann A Hadaway says:

    Dear Minister of Finance,

    I am suggesting the implementation of a ‘Corona virus unemployment Support.’ We have not yet closed our Country but we are witnessing the fall-off of businesses. The only sector that is booming is the food businesses and that too will soon see its worst days as more persons will loose their jobs. Even after this virus is contained, the World will experience one of its worst economic depression. SVG worst as we have nothing to rely on. Nothing! In the interim, some businesses have started laying off their workers and of course many more will have to do so.

    Give businesses the option to withhold some of their taxes to offset employees salaries for a particular period.

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