G20 Financial Resources

June 15, 2009

 

No. 17/09-G

 

CDB PRESIDENT CALLS FOR GREATER ACCESS

TO G20 FINANCIAL RESOURCES

 

President of the Caribbean Development Bank (CDB), Dr Compton Bourne, is calling for a relaxation of conditions for access to G20 financial resources managed by the World Bank and the International Monetary Fund. 

 

In an address to the International Economic Forum of the Americas Conference of Montreal on June 11, 2009, he noted that the counter-cyclical programmes financed in CARICOM countries by the governments themselves and with assistance from CDB, needed to be expanded with external financial resources.  In April 2009, the G20 nations committed US$ 850 billion through the International Monetary Fund and multilateral development banks “to support growth in emerging and developing countries by helping to finance counter-cyclical spending, bank recapitalization, infrastructure, trade finance, balance of payments support, debt rollover and social support”. 

 

The major programmes in the World Bank are the Global Food Response Program and the Rapid Social Response Fund.  Current policies restrict eligibility to low income countries.  Most CARICOM countries are middle- income and therefore cannot access these resources despite being no less adversely affected by the global economic crisis. The main new facility at the IMF is the Flexible Credit Line established in March 2009. This Facility has pre-set criteria such as sound public finance, a record of steady sovereign access to international capital markets on favourable terms, capital accounts dominated by private flows, low and stable rates of inflation and a comfortable foreign reserves position. 

 

Very few developing countries in the Caribbean and elsewhere would satisfy those criteria. Not surprisingly, only one country, Mexico, has been able to access the IMF Flexible Credit Line.  Dr Bourne has urged that CARICOM leaders lobby for relaxation of the conditions for access to the new facilities at the World Bank and the IMF, and encourages their major international development partners to support them in this endeavour.