The recent Island Council meeting called by the National Alliance (NA) to address the economic situation allowed the Democratic Administration (DP) to present its outlook and plan of action to the honourable council and to the people of the island.
The DP plan of action entailed the development of an alternative sector such as international financial services, telecommunications, education and agriculture. Funds for the development of those projects have been allocated in the Social Economic Initiative (SEI) and that funds from this fund will also be re-allocated to deal with the impact expected. Some other interventions were also announced, however, with the current political crisis, we will have to wait now to see if their will be a difference in policy interventions to deal with the ever growing global economic crisis.
This weekend, the G20 countries will be having a summit in Washington to chart a direction of what additional measures are needed to deal with the global economic and financial crisis. All leaders of governments will be focussed on the outcome of this summit to see what plans will be proposed to deal with the crisis.
In the meantime, the global crisis continues to grow within the Caribbean region. For example, the Bahamas which is just off the U.S. coast has reported that its tourism industry is taking a battering as the effects of the crisis in the United States trickles down into the economy with hotel occupancy levels and advance hotel bookings falling with no hope of the situation reversing in the coming months. It has been projected that at the end of this year, there will be a more than six per cent decline in total visitors to the Bahamas, with stopover visitors declining more than cruise passengers.
It is therefore imperative that a government for the nation is formed as soon as possible in order to bring forth stability, and at the same time hits the ground running ready to deal with the impending economic crisis by providing a progressive policy and a plan of intervention measures to ensure confidence in our economy and to assure employment for our people.
The International Monetary Fund (IMF) has reportedly advised the Government of the Bahamas that increasing government spending, through borrowing, would be a way to cushion the impact of the economic crisis, because it would be inappropriate to cut recurrent government expenditures at this time in an attempt to mitigate the fiscal impact of less revenues (taxes). The IMF pointed out that government spending can provide an important stimulus to the Bahamian domestic economy in the face of shrinking economic growth.
In the meantime, the World Bank Group has stated that it will substantially increase its financial support for developing countries, including the launch or expansion of four facilities for the crisis-hit private sector that is critical to employment, recovery and growth. The International Finance Corporation (IFC), a World Bank company, is responsible for the four initiatives.
The International Bank for Reconstruction and Development could make new commitments of US$100 billion over the next three years. The increase in financial support by this financial institution would support countries facing big budget short-falls, and help sustain long-term investments upon which recovery and long-term development will depend.
The aforementioned should be looked into by the next Island Government. Because we are part of the Netherlands Antilles and not an independent nation state, these facilities may not apply to us due to our constitutional relationship within the Kingdom, however we must dig deeper and leave no stone unturned by looking at having such facilities developed within the framework of the Dutch Kingdom to support civil society. With the Island Government having limited financial resources and not being able to borrow, interventions as called for by the private sector may be very much limited.
The St. Maarten Hospitality & Trade Association (SHTA) in a meeting at the end of October with the NA called for an economic stimulus package while the Chamber of Commerce announced that an action plan is needed to cushion the effects of the financial crisis.
The Economic Commission for Latin America and the Caribbean (ECLAC) has suggested that public investment in infrastructure may help the Caribbean region to mitigate the impact of the global financial crisis, and that special attention should be given to the sectors that most stimulate the real economy while the global financial architecture is redesigned.
The approximately US$100 million in insurance claims due to the passing of Hurricane Omar that have been filed according to Gulf Insurance, would also be a plus for the economy and helping to mitigate the impact of the global financial/economic crisis which is expected to last for about 18-months.
We need to ensure that the working class continues to have a secure job; that government continues to collect revenues to pay for services and investments; and this can only be achieved by generating economic activity and re-investing, but we need to have the stable political environment that would provide the necessary stimulus to enact what is necessary to safeguard our nation through these challenging times.
Roddy Heyliger