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ECCB Governor warns of future economic shocks being eclipsed by current crises

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by Kevon Browne

St. Kitts and Nevis (WINN) – According to the International Monetary Fund (IMF), the global economy is experiencing multiple, unprecedented shocks; the impact of the pandemic and the war in Ukraine has triggered sharp increases in food and energy prices, exacerbating inflationary pressures.

At the Annual Meetings of the International Monetary Fund and the World Bank Group, which started on October 10, financial institutions, government bodies and non-profit organisations are discussing insights and action plans on how to respond to short-term shocks and bolster economic institutions to tackle long-term challenges.

As it relates to the Caribbean region, one of the long-term challenges facing financial institutions and governments is climate disasters, another shock that can cripple the economies impacted by natural disasters.

The Eastern Caribbean Central Bank (ECCB) Governor, Timothy N J Antoine, noted in a panel discussion on October 12 that the Caribbean cannot survive a climate catastrophe if action is not taken now.

“We can survive inflation. We can survive recession. But we cannot survive a climate catastrophe if we fail to act now. That resonated with us in the Caribbean, and I’m sure it resonates with countries large and small because the climate crisis is not a respecter of size. Although, of course, small size means that we’re more vulnerable. And so, all I would add is that I just feel a real sense of urgency to join our efforts to work together for this cause, and that will be my appeal, really, to all our partners who are supporting CARTAC as we renew for our next cycle, as well as others who would wish to come on board in the fight, we need every hand on deck.”

The Governor made those remarks during the “Building Resilience for Today and Tomorrow” panel discussion at the IMF/World Bank Groups Annual Meeting.

Antoine noted that while the region is trying to survive the current crises, the region may miss the opportunity to prepare for future crises.

“And there’s a danger in this period that we are so consumed with fighting for survival that we miss opportunities to press forward with resilient for today and tomorrow.”

The Governor explained how the region could build climate resilience by developing and strengthening skills, processes and resources needed amongst financial regulators, Central Banks, and Ministries of Finance to survive, adapt and thrive.

How do financial institutions build resilience?

The first is Risk Management, assessing transitional and physical risk and Green Financing – increasing financial flows from the public, private and not-for-profit sectors to sustainable development priorities.

However, the Governor said the region needs to do more to be included and benefit from the financial markets already flourishing in larger and richer countries.

“I keep making the point if all we do is assess risk in the Caribbean, we will simply confirm what you already know to be true; that we are a high-risk region in respect of climate. The question then is, what are you doing about it? And that requires financial resources for both mitigation and adaptation. So one of the things in terms of capacity development that is needed now is for us to build out a green finance market in the Caribbean.”

Antoine added, “Do you know in 2020, green bonds issuance was $270 billion globally? Do you know how much of that came to the Caribbean? Not one dollar. Notwithstanding what I just explained in terms of our own needs and our own exposure. So even as we demand that countries meet their obligations and commitments under the Paris agreement, we must also take [the] initiative in the Caribbean to build out a green finance market to tap into regional savings, for example, which is estimated around $50 billion. In fact, it’s more than that now. So we have to structure these things; we have to create incentives, create markets, allow finance operators/financial institutions to be able to understand what is possible and be a part of that because the fund [IMF] has always said, and we agree, we have to bring in the private sector to address this challenge. The official sector [on] its own will not suffice. And let’s be honest, the bilateral and official are not yet stepping up to the plate sufficiently to address the needs; they are not meeting the moment yet.”

The 2022 Annual International Monetary Fund and the World Bank Group Meetings continue until Sunday, October 16.

MAKANA FERRY SCHEDULE

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