PM Mitchell: Region needs CDB now more then ever

Following is the statement delivered by Prime Minister and Minister of Finance, Dr. Keith Mitchell who is the Governor for Grenada on the Barbados-based Caribbean Development Bank (CDB) at their annual meeting held last week in St. Lucia

Mr. Chairman, Prime Ministers, Premier, Chief Minister, fellow Governors, President of the Bank, Directors and Senior Officers of the Bank, Bank staff, Observers, Distinguished Guests, Ladies and Gentlemen.

I congratulate the Government and people of St. Lucia on their excellent hosting of the 2013 Annual Meeting of the Caribbean Development Bank (CDB) Board of Governors.

While expressing regrets over Grenada’s difficulties during the past 12 months and the anxieties in the Bank arising therefrom, I hasten to record Grenada’s appreciation of the Bank and the Borrowing Member Countries (BMCs) in the Organisation of Eastern Caribbean States (OECS) for your support and solidarity during this trying period.

On February 19, 2013, the people of Grenada furnished me with an overwhelming mandate to lead Grenada out of economic decline and despair. I have accepted this mandate with deep humility and a heightened sense of opportunity.

As I did when I met with the President and Senior Management last month at CDB’s Headquarters, I wish to assure the Governors and Directors of CDB that Grenada views CDB as a longstanding and special development partner and is very mindful of its responsibilities to the Bank.

More importantly, Grenada is committed to meeting these responsibilities.

Stimulating Economic Growth and Job Creation

We believe that the issues of economic growth, competitiveness and job creation are the most pressing socio-economic issues facing Grenada and indeed our entire Region at this time.

This current protracted period of little or no growth, high debt and high unemployment must come to an end. In this regard, the Bank and its membership must confront the issue of debt overhang which is acting as binding constraint on growth in some of our countries.

Furthermore, we must raise the competitiveness of our economies to enhance prospects for the domestic and regional private sector and to attract foreign direct investment in the productive sectors.

In Grenada, we have begun the formidable task of building the New Economy. The first installment was delivered last month when we presented our first Budget.

The key elements of the New Economy may be summarised as follows:

(1). Fiscal sustainability (putting fiscal house in order)

(2). Debt sustainability (requires debt restructuring)

(3). Smaller Government

(4). Private sector as key driver

(5). Technical and Vocational Education and Training

(6). Life-long learning and high-wage employment

(7). Innovation and knowledge

(8). Information and Communications Technology applied to all aspects of development

(9). World class service industry especially in tourism

(10). Green Business, industries and lifestyles

(11). Sustainable Development

(12). Developing Agriculture along the Value Chain

(13). Efficient Light Manufacturing Sector

(14). Dynamic Export Sectors

(15). Oil, gas and renewable energy sectors

After economic contraction in the three of the past four years, the Grenadian economy is projected to grow in 2013 with steady improvement over the medium term.

Strategic Directions of CDB

Grenada commends the Board of Directors, President and staff for the considerable strides made over the past year to reposition the Bank to meet the demands of its changing operating environment. In particular, we note that key staff vacancies have been filled including the positions of Chief Risk Officer,

Director of Finance and Corporate Planning and General Counsel.

The filling of these senior positions together with staff training are critical investments in the Bank’s capacity to serve its membership and bode well for the Bank going forward.

Before I continue, may I take this opportunity to place on record Grenada’s profound appreciation of the services for several members of staff who have recently retired or will retire later this year including: Mrs. Tessa WilliamsRobertson, Mrs. Yvonne Moses-Grant, Mr. Clairvair Squires and

Mr. Adrian Debique.

For more than a quarter of a century, these Caribbean sons and daughters have toiled in thevineyard of regional development. They have served long and well and deserve a long and happy retirement. Grenada is ready and willing to receive them at any time.

I return to the issue of economic growth and job creation. According to the Bank’s recent 2012 Annual Report, loan approvals and disbursements to Borrowing Member Countries (BMCs) have fallen precipitously over the past two years and the economic prospects for many BMCs in the near and medium term are not good.

Against this backdrop, an obvious question arises: what can the Bank do to help to turnaround the socio-economic fortunes of these countries? May we suggest the following.

First, the Bank ought to exert greater influence on the policy choices of its membership by strengthening its analytical work and embedding more fully a learning culture about the lessons learned from the practice of development in our region. These lessons must be informed by the Bank’s own experience, the experience of other development partners and the BMCs themselves.

In addition, the Bank ought to have a relentless commitment to sharing these lessons among its membership. For example, what have we learned about hotel and tourism developments in the Caribbean that can guide how Governments support this business going forward?

Or what have we learned about central revenue authorities and their capacity to improve tax administration and overall fiscal outcomes?

Second, the Bank should continue to support regional integration initiatives that help reduce the cost of doing business, increase trade and create a more attractive business environment for regional and foreign direct investment.

Third, the Bank ought to develop new products including flexible lines of credit to help accelerate the pace of economic recovery in the BMCs. In this regard, products to reduce the high cost of energy especially electricity and our carbon footprint must be designed and made available.

What products can the Bank provide both Governments and the private sector to tackle this issue given its significant impact on growth and competitiveness?

Fourth, the Bank ought to develop capacity and partnerships to support public private partnerships for infrastructural development. In this regard, the Bank will need to forge partnerships with development partners which are already working in this area.

Speaking of partnerships, Grenada welcomes the US$20 million dollar loan from theInter-American Development Bank (IDB) to the CDB approved by the CDB’s Board of Directors this week. This is welcomed news for the OECS countries which are not members of IDB but which have significant needs for concessionary financing.

On the issue of diversified Bank membership to improve credit quality, we suggest that the Bank undertake a careful analysis of its potential members and the demand for the services of the CDB.

Conclusion

In conclusion, Mr. Chairman, the Bank is now better positioned to grow and grow it must. The long term viability of the Bank is predicated on a turnaround in the economic fortunes of the BMCs.

Consequently, the Bank must bring laser-like focus to this priority and ensure it plays an increasingly influential role in this turnaround. We anticipate further engagement on some of the issues raised in this Statement and indeed on the views of the entire membership on the strategic directions of CDB.

Mr. Chairman, now more than ever, our Region needs the Caribbean Development Bank.

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