CSME SUCCESS IN TODAYS ECONOMIC ENVIRONMENT

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CSME SUCCESSIN TODAYS ECONOMIC ENVIRONMENT

• Presentation at CILS 2008
• Acknowledgement Amb. Havelock Brewster An
  Operation Strategy for Supporting RCI.
• IMF Trevor Alleyne Paul Cashin The Global
  Financial Crisis Implications for the Caribbean

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CSME SUCCESS

• Outline
• The state of RCI/CSME in the Region
• Impact of the Financial Crisis
• Implications for RCI/CSME
• Adjustments required

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CSME SUCCESS

• The State of RCI Economic Underperformance
• Small market size
• Limited natural resources
• Under-developed human resources
• Under-diversified production structures
• External migration
• Vulnerability to natural disasters
• High debt

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CSME SUCCESS

• The State of RCI/CSME Implementation
• Single Market Far advanced
• Single Economy Not much
• National sovereignty vs Community governance
• Lack of popular support
• Perception of uneven distribution of
  benefits/costs
• Ineffective cohesion mechanisms
• Inefficient decision-making processes
• Inadequate institutional capacity

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CSME SUCCESS

• The State of RCI/CSME Implementation
• Policies and measures needed
• Policy Coordination/Harmonisation
• Institutional, Legal Regulatory Development
• Policies for Sectoral Development
• Market access measures
• Functional Cooperation

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CSME SUCCESS

• Impact of the Financial Crisis
• Financial
• Real Economy

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CSME SUCCESS

• Impact of the Financial Crisis
• Financial
• Asset quality
• Liquidity
• Credit sequeeze
• Trade credit lines
• Other external funding
• Foreign bank contagion

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CSME SUCCESS
Emerging Markets Sovereign Spreads (Basis Points)
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CSME SUCCESS

• Impact of the Financial Crisis
• Real Economy
• Lower tourism receipts
• Lower remittances
• Lower FDI and other private capital
• Lower commodity prices
• Slower economic growth
• Balance of payments pressures.

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CSME SUCCESS
Travel Receipts in Selected CARICOM States in
GDP Average 1980-2005
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CSME SUCCESS
Total Remittances in of Exports Average
2000-2007
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CSME SUCCESS
Financing of Current Account Deficits Percent of
GDP, 2007
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CSME SUCCESS

• Implications for RCI/CSME
• Need for international reserve management
• Importance of maintaining fiscal discipline
• Revert to protection
• Waivers etc for CET
• Reduction in contributions to regional
  institutions
• The need for a regional response
• Regulatory environment
• Liquidity