GEORGETOWN, Guyana (GINA) — The need for a diversified economic base in light of the global financial and economic crisis was further highlighted during the opening of the 41st Annual Monetary Studies Conference at the Bank of Guyana on Tuesday morning.
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| Dr Ashni Singh |
Minister of Finance Ashni Singh during the feature address noted the importance of a diversified economic base while stressing on the importance of policy makers ensuring that policies take into consideration the realities that are confronted by the Caribbean Region.
“Countries in the Caribbean need themselves to adopt development strategies that will diversify their economic base and reduce their vulnerability. In this regard Guyana has undertaken the National Competitiveness Strategy and the Low Carbon Development Strategy,” the Minister said.
Noting the effects of the financial crisis the Minister said the meeting is being held at a time when there are still high levels of uncertainty in financial markets and the financial services industry following the worst global financial and economic crisis since the great depression of the 1930s.
“The intensity of the turbulence in international markets has surprised nearly everyone. It occurred during a period of strong world economic growth and low interest rates. It was triggered by a sudden and wide spread loss of confidence in securitization and financial reengineering as well as the failure to evaluate price risks,” the Minister said.
“In addition, the impact has been greatest on countries whose supervision of creditors has been considered to be amongst the best in the world. A striking feature of this latest episode in the financial markets of developed countries has been the relative resilience of markets in emerging and developing countries to the crisis. Indeed in many countries financial markets continue to be strong and to return very robust performances,” Minister Singh noted.
“Profitability has remained relatively strong although there has been some decline. The main risk facing the financial system in the Caribbean, is credit risk stemming from the depressed economic conditions arising from the prevailing global economic crisis. This has resulted in depressed demand and increased risk submersion which manifested itself in slower credit growth, falling financial asset prices and lower interest rates,” Singh stated.
Economic activity has declined almost everywhere in the Region with few Caribbean countries appearing to have avoided economic contraction in 2009, he said.
“The Caribbean Region has also experienced slow export growth and reduced export prices, dramatic drops in foreign investments, decline in remittances for workers in recession affected countries, and contraction in foreign aid.”
Minister Singh stated however that debates in developed countries about the impact of the global financial crisis have overlooked its impact in developing countries.
“The US Administration introduced a stimulus package of US$ 825B equivalent to the combined 2007 GDP totals of Singapore, Thailand, Vietnam, Philippines and Hong Kong. There is a number of statements about the global recession including references to perhaps the most popular, the most current cliché, the ‘green shoots’ recovery, which implies the appearance of a global economic recovery through the positive trends and stock market prices, increases in retail sales, restoration of consumer confidence and credit growths,” the Finance Minister noted.
Other statements, he said, point to a persistence of the recession, further dividing the global economy. However, no time frame has been given for when the green shoots will positively impact developing countries.
“What is clear is that our Region cannot wait on recovery in developed countries. The poorer and vulnerable economies of the Region need financial help and decisive action urgently to preserve jobs and sustain the hard-hit sectors of our affected economies. Regional heads and technocrats have responded quickly, decisively, responsibly in stemming the effects of the financial crisis. To avert full economic decline Governments adopted both short to medium-term as well as long-term measures including fiscal stimulus policies as well as sectoral and social policies,” Singh said.
The Minister noted that the purpose and determination with which Regional Heads have responded to address the issue is essentially important. He pointed out that the Regional Heads of Government Task Force on the global and economic crisis headed by President Bharrat Jagdeo met in Jamaica in August when a series of interventions were decided upon. He noted that President Jagdeo has taken the discussions to the World Bank meetings where he argued on the Region’s behalf stressing on the need for debt relief for vulnerable Caribbean countries and small states and enhanced development assistance, the Minister said.
The Conference is being held under the theme: “Building financial sector resilience in the Caribbean,” from November 10 – 13 co-sponsored by the Bank of Guyana and the Caribbean Centre for Money and Finance with participants from Central Banks in the Caribbean. |
