Time for a new partnership

Dominique Strauss-Kahn, Contributor

It is a great pleasure for me to attend the 31st Regular Meeting of the Caribbean Community (CARICOM), in Montego Bay. As I look at the situation in the Caribbean today, I see a region hit hard by the global economic crisis. And I see many governments meeting these difficult challenges head-on by strengthening policies and tackling long-standing economic problems.

The global recovery is proceeding at different speeds in different regions of the world, and the Caribbean is no exception. The countries that rely on commodity exports are experiencing a stronger rebound than those depending on tourism. Across the region, high debt burdens and tight borrowing conditions have left Caribbean leaders with little room to manoeuvre. In some countries, strains have appeared in the financial sector, and the proposed tightening in international standards for offshore financial centres will also pose challenges.

Difficult climate

Despite this difficult climate, I have a positive message to offer. Caribbean countries have a chance to put an end to the negative cycles of high debt and low growth that left some of you with so few policy options when the "great recession" reached your shores. This is an opportunity to put public finances on a sustainable path and take measures to raise productivity, essential if you are to succeed in the competitive global marketplace. This will take tough decisions and hard work, but you are in good company, as many nations across the world face similar challenges.

Indeed, most advanced economies currently face the difficult challenge of major budget adjustment and ongoing financial sector repairs. The timing and strength of the policy response across the world has to be calibrated to address underlying problems without killing the recovery. To succeed, we need to continue the international policy co-ordination that served us so well during the crisis, if the world is to correct global imbalances, raise growth, and carry through urgent reform of the financial sector.

The Group of 20 large and emerging market economies has shown that the spirit and practice of multilateralism can produce real results. Their coordinated stimulus in 2009 helped prevent another Great Depression. And as recently as their summit last weekend in Toronto, the G20, through the Mutual Assessment Process, showed how they are working to integrate global welfare into domestic policy making. In its input to this process, the IMF calculated that cooperative action by the G20 could boost world growth by 2.5 per cent over the next five years.

What does this mean for the Caribbean? Actions by the G20 will affect countries everywhere, including in CARICOM. With its universal membership, the IMF can help steer the G20 process in the direction that best serves the whole world, including the Caribbean.

New partnership

In terms of direct support to this region, the IMF is providing policy support and extending financing to ease the impact of the crisis. IMF-supported economic programmes in the region have catalysed low-cost financing and grants from other institutions and donors. This policy and financing support is backed by technical assistance, including from the regional centre based in Barbados, designed to strengthen human capital and institutional capacity.

I see the IMF in a new partnership with many of its members, including with countries in the Caribbean. We must deepen trust and respect, and renew our commitment to working together.

Dominique Strauss-Kahn is managing director of the International Monetary Fund. Feedback may be sent to columns@gleanerjm.com