Caribbean governments are set to gain greater capacity in the management of public finance since during the next three years, the ECLAC subregional headquarters for the Caribbean will help deepen the expertise of policy makers and finance managers in the application of methods and procedures for better management and forecasting of public expenditure, revenue and debt.
The recent global economic crisis was particularly severe on the economies of the Caribbean, especially those that depend heavily on services for their economic growth. It has exacerbated already existing high-levels of debt for several countries of this region.
Reduced fiscal space has been a long standing problem, and chronic fiscal deficits leading to high public debt is one of the most important development challenges facing Caribbean Small Island Developing States (SIDS). For example, the average fiscal deficit and public debt levels were 3.4% and 84.4% of GDP, respectively, from 2000 to 2007. Moreover, four countries had debt levels in excess of 100% of GDP.
The persistent fiscal and debt problem in the region is partly a reflection of pro-cyclical fiscal policy, where governments spend excessively during booms and are forced to retrench during downturns.
In addition, systems for revenue and expenditure forecasting and debt management are weak in a number of countries, particularly as they relate to contingent liabilities.
Thus, ECLAC proposes a broad programme of capacity building to strengthen public finance management in the Caribbean, and to control fiscal deficits and debt.
Six countries have been chosen as beneficiaries of the project: Antigua and Barbuda, Barbados, Belize, Guyana, Jamaica and St. Kitts and Nevis, given the gravity of their fiscal imbalances and debt, and their existing limitations in fiscal management.
The Development Account is a capacity development programme administered by the United Nations Secretariat. The programme funds projects aimed at enhancing capacity in developing countries and are implemented by global and regional entities, including ECLAC.
In this endeavour, ECLAC subregional headquarters for the Caribbean is being supported by the Economic Development Division of the ECLAC Santiago office, as well as by the ECLAC Latin American and Caribbean Institute for Economic and Social Planning (ILPES).
