By Tony Best
That’s what people in Barbados and the rest of Caribbean may have to do now that some of them are saddled with a mountain of debt that places them on the list of the world’s most highly indebted countries.
That’s according to The Economist, a leading weekly news publication which is widely circulated in North America, Canada, Europe, Africa, Britain, the Caribbean and elsewhere.
Barbados, Jamaica, Grenada and Belize are among the prime examples of the debt problems confronting the Caribbean, the publication indicated.
“Investors’ appetite for more Caribbean debt is uncertain: Barbados recently shelved an attempt to raise some $500 million in international markets,” it said in its latest edition.
“There is much to pray for.”
The publication, whose comprehensive global coverage makes it a leading source of information and analysis, described the finances of Caribbean nations as being in a mess, warning that many of Grenada’s neighbours may have to follow the Eastern Caribbean state by having their church leaders use “the ungodly phrase” of debt restructuring.
“The reason why debt relief has risen so high up the heavenly agenda is that like many islands in the Caribbean, Grenada’s finances are in an unholy mess and threaten to push up poverty,” The Economist said in a report drawing international attention to The Caribbean Debt Crisis: God vs bondholders. The assessment had the sub-headline Small Debt-Ridden Countries Could Benefit From Divine Intervention After Praying Mightily For Debt Relief.
“Most countries in the region were hit by a collapse of tourism after the financial crisis in 2008-9,” it explained.
“Governments tried to spend their way out of stagnation, causing deficits to rise. The [International Monetary Fund] calculates public debt in the region averaged 70 per cent of [gross domestic product] in 2012 and current account deficits were a staggering 23 per cent.”
As The Economist sees it, the financial picture of the Caribbean looks something like this:
Grenada’s economy shrank by 1.2 per cent a year on average between 2008-2012. A strong default on debt has plagued the Caribbean in the past three years. Jamaica, Grenada, Belize and St Kitts-Nevis are the notable examples.
“Despite debt restructuring, Jamaica and St Kitts-Nevis still have government debt of more than 1.4 times GDP.”
The Eastern Caribbean countries have a currency union and can’t devalue their EC dollar “to boost exports and tourism”.
Barbados had to take the highly unusual step of recently withdrawing an attempt to raise $500 million on the financial markets.
What church leaders in Grenada are praying for by using the term “jubilee” is a one-off forgiveness of sins.
The situation is so dire in Grenada that Prime Minister Dr Keith Mitchell thanked the priests and other religious ministers for their support while quoting from the Book of Matthew in the Bible to explain the need for austerity measures.
Little wonder, then, that Carl Ross of Oppenheimer, a prominent securities firm, warned that a “lot of the Caribbean countries are stuck in a classic debt trap” from which they must extricate themselves.
“They need to cut government spending but that further reduces already low levels of GDP growth, Ross added.
But the Oppenheimer analyst isn’t alone. Both Moody’s and Standard & Poor’s, two of Wall Street’s leading credit rating firms have cited the need for Barbados, The Bahamas, Grenada and Belize to trim their spending and reduce their debt while striving to boost economic growth.
Some of the world’s most heavily indebted countries are in the Caribbean. Among them are Jamaica, St Kitts and Nevis, Barbados and Grenada. Because of their relatively high per capita incomes, they wouldn’t qualify for the heavily indebted poor country initiative of debt forgiveness launched by the World Bank and International Monetary Fund. Eastern Caribbean states that make the list are considered highly indebted but not poor. Indeed, Barbados and The Bahamas are considered “high income” states while Jamaica, Grenada and St Kitts-Nevis are upper middle income nations, according to the World Bank.