Front Matter

Front Matter

Author(s):
Krishna Srinivasan, Inci Ötker, Uma Ramakrishnan, and Trevor Alleyne
Published Date:
September 2017
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Note to Readers

This is an excerpt from Unleashing Growth and Strengthening Resilience in the Caribbean edited by Trevor Alleyne, İnci Ötker, Uma Ramakrishnan, and Krishnan Srinivasan.

Since attaining independence in the 1960s and 1970s, Caribbean countries have registered strong economic and social outcomes. In recent decades, however, progress on converging with the living standards of advanced economies has slowed and, in some cases, reversed. This book brings together the latest research on the Caribbean economies conducted at the IMF, including on new developments such as potential U.S.-Cuba rapprochement and the interconnected financial sector, where banks are grappling with the consequences of the global financial crisis. It analyzes the region’s macroeconomic imbalances and examines structural impediments affecting competitiveness and growth in the tourism-intensive economies of the Caribbean. The book aims to stimulate policy dialogue and contribute to efforts to address the unique economic and financial challenges facing Caribbean policymakers. One recurring theme is the need for greater regional coordination in finding solutions to address the Caribbean’s intertwined macroeconomic and structural challenges.

This excerpt is taken from uncorrected page proofs. Please check quotations and attributions against the final published volume.

Unleashing Growth and Strengthening Resilience in the Caribbean

Edited by Trevor Alleyne, İnci Ötker, Uma Ramakrishnan, and Krishnan Srinivasan

ISBN: 978-1-48431-519-4

Pub. Date: Fall 2017

Formats: Digital; Paperback, 6x9 in.; pp. 356

Price: US$25.00

For additional information on this book, please contact:

International Monetary Fund, IMF Publications

P.O. Box 92780, Washington, DC 20090, U.S.A.

Tel: (202) 623-7430 ♦ Fax: (202) 623-7201

Email: publications@imf.org

www.bookstore.imf.org

© 2017 International Monetary Fund

Unleashing Growth and Strengthening Resilience in the Caribbean

Trevor Alleyne İnci Ötker Uma Ramakrishnan Krishnan Srinivasan

© 2017 International Monetary Fund

Cover design: IMF Multimedia Services Division

Cataloging-in-Publication Data

Joint Bank-Fund Library

Names: Alleyne, Trevor Serge Coleridge, editor. | Ötker, İnci, editor. | Ramakrishnan, Uma, editor. | Srinivasan, Krishna, ‡d 1965- editor | International Monetary Fund, publisher.

Title: Unleashing growth and strengthening resilience in the Caribbean / edited by Trevor Alleyne, İnci Ötker, Uma Ramakrishnan, and Krishna Srinivasan.

Description: [Washington, DC] : International Monetary Fund, 2017.

Identifiers: ISBN 9781484315194 (paper)

Subjects: LCSH: Economic development—Caribbean Area. | Caribbean Area—Commerce. | Economic indicators—Caribbean Area.

Classification: LCC HC151.U543 2017

Disclaimer: The views expressed in this book are those of the authors and should not be reported as or attributed to the International Monetary Fund, its Executive Board, or the governments of any of its members.

ISBN 978-1-48431-519-4 (paper)

978-1-48431-891-1 (ePub)

978-1-48431-924-6 (mobipocket)

978-1-48431-925-3 (PDF)

Please send orders to:

International Monetary Fund, Publication Services

P.O. Box 92780, Washington, DC 20090, U.S.A.

Tel.: (202) 623-7430 Fax: (202) 623-7201

E-mail: publications@imf.org

Internet: www.imfbookstore.org

Contents

  • Foreword

  • 1 | Unleashing Strong, Sustainable, and Inclusive Growth in the Caribbean

    • Daniel Leigh, Krishna Srinivasan, and Alejandro Werner

  • 2 | Reinvigorating Growth in the Caribbean

    • Marcos Chamon, Joshua Charap, Qiaoe Chen, and Daniel Leigh, with support from Franz Loyola and Lulu Shui

  • 3 | Caribbean Tourism in the Global Marketplace: Trends, Drivers, and Challenges

    • Sebastian Acevedo, Nicole Laframboise, and Joyce Wong

  • 4 | Cuba Awakening: Potential Risks and Opportunities

    • Sebastian Acevedo and Joyce Wong

  • 5 | Fiscal Challenges in the Caribbean: Coping with Natural Disasters

    • Inci Otker with Franz Loyola

  • 6 | Tax Incentives: To Use or Not to Use?

    • Meredith A. McIntyre

  • 7 | Managing Economic Citizenship Program Inflows: Reducing Risk and Maximizing Benefits

    • Judith Gold and Alla Myrvoda

  • 8 | Debt Restructuring in the Caribbean: The Recent Experience

    • Joel Okwuokei and Bert van Selm

  • 9 | Financial Development and Inclusion in the Caribbean

    • Joyce Wong

  • 10 | Financial Interconnectedness in the Caribbean: Challenges for Financial Stability

    • Elie Canetti, Kimberly Beaton, Qiaoe Chen, Fabio Di Vittorio, Udi Rosenhand, and Kalin Tintchev

  • 11 | Problem Loans in the Caribbean: Determinants, Impact, and Strategies for Resolution

    • Kimberly Beaton, Thomas Dowling, Dmitriy Kovtun, Franz Loyola, Alla Myrvoda, Joel Okwuokei, İnci Ötker, and Jarkko Turunen

  • 12 | Loss of Correspondent Banking Relationships in the Caribbean: Trends, Impact, and Policy Options

    • Trevor Alleyne, Jacques Bouhga-Hagbe, Thomas Dowling, Dmitriy Kovtun, Alla Myrvoda, Joel Okwuokei, and Jarkko Turunen

  • 13 | Energy Diversification: Macro-Related Challenges

    • Meredith A. McIntyre and Ahmed El Ashram

  • 14 | Emigration and Remittances in the Caribbean

    • Joyce Wong

  • 15 | Violence in the Caribbean: Cost and Impact

    • Heather Sutton, Laura Jaitman, and Jeetandra Khadan

Foreword

The Caribbean countries—endowed with some of the greatest beauty on this planet—sustained several decades of strong growth following their independence in the 1960s and 1970s. Their success was underpinned by the development of strong democratic traditions, sound institutions, and an active debate of public policies reflecting the aspirations of the Caribbean people. More recently, however, many of the countries in the region have fallen into a trap of low growth and high debt. In addition to the costs posed by frequent natural disasters, which have contributed to low growth, the region has also endured deep macroeconomic, financial, and structural challenges. A large public debt overhang, combined with high energy costs, violent crime, constrained access to credit, high cost of doing business, and brain drain—to name just a few—have undermined regional growth prospects.

The IMF’s focus on small states, in general, and the Caribbean, in particular, has been growing over the years, notably through dialogue and collaboration with key stakeholders. I personally have had the pleasure of engaging through the years with policymakers from the Caribbean during the Annual Meetings of the IMF and the World Bank. In addition, the IMF, with strong support from the donor community, has made significant strides in enhancing technical assistance to build capacity in the region. In some countries, our engagement through IMF-supported programs could even be considered as game-changing.

It is my distinct pleasure to be part of this effort to disseminate the analytical work on the Caribbean that has been conducted largely in the IMF’s Western Hemisphere Department. This book is timely and important in many respects. With a primary focus on how to raise the region’s growth potential while balancing it with stability, it provides rich analyses of key macroeconomic, financial, and structural impediments to growth, and recommends feasible solutions for the Caribbean. The chapters draw on the vast academic literature, and synthesize a substantial amount of analytical work on highly topical issues for the region. The book also broadens the reach of our policy advice to a wider audience across the region and globe.

This book serves as a fresh platform to further our close engagement and policy dialogue with the region. I hope that it will spark a healthy debate on the economic challenges of the region and further research on the path to unleashing sustained higher growth and job creation.

Christine Lagarde

Managing Director

International Monetary Fund

Contributors

Sebastian Acevedo is an economist in the IMF’s Western Hemisphere Department and works on the Ecuador desk. At the IMF, he worked for six years on the Caribbean, covering topics related to natural disasters, economic growth, productivity, tourism, debt, and exchange rate regimes. He holds a B.A. in Economics from Universidad EAFIT in Colombia, an M.A. in International Trade and Economic Cooperation from Kyung Hee University in the Republic of Korea, an M.A. in Economics from Georgetown University, and a Ph.D. in Economics from the George Washington University.

Trevor Alleyne took on his current position as an assistant director/division chief of the Caribbean I Division at the IMF’s Western Hemisphere Department in September 2013. He is responsible for the economies of the Organisation of Eastern Caribbean States. His previous Caribbean experience at the IMF was as division chief of the Caribbean II Division during 2008–12, serving also as mission chief for Jamaica, Barbados, The Bahamas, and Suriname. Mr. Alleyne has been at the IMF since 1992, with assignments mainly in the African and Western Hemisphere Departments. Most recently, he served as mission chief for Nigeria and Zambia (2012–13). Prior to joining the IMF, he was a principal analyst at the U.S. Congressional Budget Office from 1986 to 1992. He is a professional economist with over 25 years of experience and was educated at the University of the West Indies (B.Sc.), University of Pennsylvania (M.A.), and the University of Maryland (Ph.D.)

Kimberly Beaton is an economist in the IMF’s Western Hemisphere Department, currently covering Panama. Previously, she was a senior advisor to the Executive Director for Canada, Ireland, and the Caribbean. Prior to joining the IMF, she was an economist at the Bank of Canada. She is a graduate of Queen’s University in Canada.

Jacques Bouhga-Hagbe is currently a senior economist at the IMF and has worked on many countries since joining the IMF in 2002. He holds a Ph.D. in economics from Cornell University, New York, and an engineering degree from the Ecole Centrale de Paris.

Elie Canetti has worked at the IMF for 25 years, where he is an advisor in the Western Hemisphere Department. He has also worked on Asia and on financial stability issues. His Caribbean experience includes heading the Financial Sector Assessment Program for The Bahamas and serving as mission chief for Trinidad and Tobago and St. Vincent and the Grenadines. He was adjunct finance professor at Johns Hopkins School of Advanced International Studies and worked at PIMCO with Mohamed el Erian. He holds degrees from the University of California, Berkeley; London School of Economics; and Princeton University.

Marcos Chamon, a national of Brazil, is deputy division chief in the Caribbean III Division of the IMF’s Western Hemisphere Department and mission chief for Guyana. He holds a Ph.D. in economics from Harvard University. He has published on a wide range of topics, including sovereign debt restructuring, currency mismatches, economic growth, consumption and savings, early warning models for balance of payments crises, the design of capital controls and macro prudential policies, monetary policy, and foreign exchange intervention in emerging markets.

Joshua Charap, a national of the United States, is IMF resident representative in Suriname. He holds a B.S. in physics and an M.S. in economics from the Massachusetts Institute of Technology and a Ph.D. in economics from the University of Pennsylvania. For most of his career, Mr. Charap has worked on countries supported by IMF programs, including as resident representative in Afghanistan, Cambodia, and Yugoslavia. Prior to joining the IMF, he was an economist in the Chief Economist’s Office at the European Bank for Reconstruction and Development.

Qiaoe Chen, a national of China, is an economist in the Caribbean II Division of the IMF’s Western Hemisphere Department. She holds an M.S. in economics from the Tsinghua University of China. Prior to joining the IMF, she worked for many years in the Central Bank of China, covering international financial cooperation and banking supervision issues. Her research focuses on economic growth, financial supervision, and monetary policy.

Joel Chiedu Okwuokei is an economist in the Caribbean II Division of the IMF’s Western Hemisphere Department. He holds a Ph.D. in economics from the University of Benin, Nigeria, which he attended as an African Economic Research Consortium scholar. Before joining the IMF, he worked with the federal government of Nigeria for several years. His research interests include economic growth, fiscal policy, monetary policy, and financial sector reform.

Fabio Di Vittorio, a national of Italy, is an economist in the IMF’s Western Hemisphere Department, where he has worked extensively on Eastern Caribbean Currency Union economies. He holds a Ph.D. in Economics from New York University. His research covers financial economics, banking, financial regulation, and macroeconomics.

Thomas Dowling is an economist in the IMF’s Western Hemisphere Department and works on the Barbados and Trinidad and Tobago desks. He has worked at the IMF for eight years on the United States, Canada, and the Nordic countries prior to joining the Caribbean Division. His research interests include international trade, financial intermediation, and fintech, and nowcasting.

Judith Gold, a national of Canada, has served as advisor to the Canadian Executive Director to the IMF, representative to the Paris Club, and mission chief to Guyana, Panama, Trinidad and Tobago, St. Kitts and Nevis, and presently, Barbados. She holds an M.A. in economics from the University of York, in Toronto. She has contributed to and published several economic articles and, more recently, co-authored an IMF working paper entitled Too Much of a Good Thing? Prudent Management of Inflows under Economic Citizenship Programs.

Laura Jaitman is an economist at the Research Department of the Inter-American Development Bank (IDB). She joined the IDB in 2014, where she previously coordinated the research agenda for the Citizen Security and Justice sector. Her principal areas of research are the economics of crime, development economics, and political economy. Before joining the IDB, she worked for a decade as a consultant to the World Bank, the IDB, and J-PAL in the evaluation of public policies in various Latin American countries. Ms. Jaitman holds a Ph.D. in economics from University College London. Her work was published in international peer-reviewed journals, such as The Economic Journal and Journal of Economic Behavior and Organization, among others.

Jeetendra Khadan is an economist consultant at the Inter-American Development Bank (IDB). He currently holds the position of country economist for Suriname and researcher in the Caribbean Economics Team. He has written and published books as well as academic papers in peer-reviewed journals and the IDB’s working paper series on issues ranging from international trade, regional integration, private sector development, macroeconomics, applied economics, and other contemporary policy issues. Mr. Khadan Jeetendra holds a Ph.D. in economics from the University of the West Indies.

Dmitriy Kovtun, a national of Kazakhstan, is a senior economist in the IMF’s Western Hemisphere Department. He also worked in the African, Strategy and Policy Review, and the European Departments of the IMF. He holds a Ph.D. in economics from the University of Kentucky (Lexington). His research has focused on macro-financial linkages, nonperforming loans, and monetary sector issues.

Nicole Laframboise attended the University of Western Ontario in Canada and the London School of Economics, receiving an M.A. in economics in 1987. She worked in the research department at the Bank of Montreal, the United Nations Development Programme in Mali, and then at the federal Department of Finance in Canada. She was seconded to the Office of the Executive Director for Canada at the IMF and joined the staff of the IMF in late-1996. Nicole has held various positions at the IMF, including in the areas of policy development and review, as a desk economist on country teams in North Africa and Central Asia, and as a speechwriter for the Managing Director in the Communications Department. As deputy division chief in the Western Hemisphere Department, she has served as mission chief for Barbados, Grenada, and now Bolivia. Recent projects include research on the macroeconomic impact of natural disasters, the determinants of tourism flows to the Caribbean, income and price elasticities of tourism arrivals, and a tourism sector price index.

Daniel Leigh, a national of the Czech Republic and the United Kingdom, is deputy division chief in the Caribbean III Division of the IMF’s Western Hemisphere Department. He holds an M.Sc. in economics from the London School of Economics and a Ph.D. in economics from Johns Hopkins University. Prior to joining the Western Hemisphere Department, Mr. Leigh worked for several years in the IMF’s Research Department on the World Economic Outlook. His research focuses on economic growth and monetary and fiscal policy.

Franz Loyola is currently a consultant for the World Bank Group’s Independent Evaluation Group. Previously, he was a research analyst in the IMF’s Caribbean III Division of the IMF’s Western Hemisphere Department. He is a Ph.D. candidate in economics at George Mason University and holds an M.A. in economics from the University of the Philippines.

Meredith Arnold McIntyre, a Grenadian national, is a deputy division chief in the IMF’s Western Hemisphere Department. Prior to her current assignment, she was coordinator of the IMF Caribbean Regional Technical Assistance Center. Ms. McIntyre holds a B.Sc. (Econ) honors degree from the University of the West Indies (Cave Hill campus, Barbados), an M.A. in economics from Yale University, and a Ph.D. in economics from the University of Toronto. Prior to joining the Western Hemisphere Department, Mr. McIntyre worked in for several years in the African Department, including serving as the IMF’s resident representative in Ghana for three years.

Alla Myrvoda is an economist in the Caribbean I Division of the IMF’s Western Hemisphere Department (WHD), where she covers the Eastern Caribbean Currency Union economies. Before joining WHD in 2014, her previous assignment was in the Asia Pacific Department, working on Lao People’s Democratic Republic, China, Hong Kong Special Administrative Region, and Macao Special Administrative Region.

Shelton Nicholls is a senior financial sector expert in the Technical Assistance Division of the IMF’s Monetary and Capital Markets Department. He was previously resident adviser on financial stability at the Caribbean Regional Technical Assistance Center in Barbados (2014–17) and deputy governor, Research and Policy of the Central Bank of Trinidad and Tobago (2003–13). He holds a Ph.D. in economics from Queen Mary, University of London, and has published several articles in international academic and policy journals on trade, economic integration, econometric modeling, and financial services.

Inci Otker, a Turkish national, is the IMF’s mission chief for St. Kitts and Nevis and division chief of Caribbean III of the Western Hemisphere Department (WHD), which covers Aruba, Curaçao and St. Maarten, Guyana, Suriname, and Trinidad and Tobago. She holds a Ph.D. in economics from Carnegie Mellon University, Pittsburgh, and a B.A./M.S. from the Middle East Technical University, Turkey. Before joining WHD, she was an advisor in the Monetary and Capital Markets Department, and senior advisor/deputy director at the World Bank. Her research covers financial stability, systemically important financial institutions, capital controls, exchange regimes, inflation targeting, financial crises, and global risks, including climate change, natural disasters, and pandemics. She has co-edited books on credit growth and financial sector resilience and has worked at the Central Bank of Turkey.

Uma Ramakrishnan is an assistant director in the IMF and Division Chief of the Caribbean II Division in the Western Hemisphere Department. She has been mission chief for Jamaica since May 2015. She previously held the position of mission chief for El Salvador and has worked on several countries in Asia and Europe. She has also worked extensively on IMF lending policies. She holds a Ph.D. in economics from Georgetown University.

Udi Rosenhand is a research analyst in the IMF’s Western Hemisphere Department. A graduate of Tulane University, Mr. Rosenhand’s interests include game theory and monetary policy.

Krishna Srinivasan has been with the IMF since 1994 and has served in several departments across the institution. In his current capacity as a deputy director in the IMF’s Western Hemisphere Department (WHD), he oversees the institution’s work on several countries as well as WHD’s research activities and flagship publication Regional Economic Outlook: Western Hemisphere. He previously served in the European Department as the IMF’s mission chief for the United Kingdom and Israel and, before that, in the Research Department, where he led the IMF’s work on the Group of Twenty. He obtained his Ph.D. in international finance from Indiana University and an M.A. from the Delhi School of Economics and has published several papers at the IMF and in leading academic journals. He is co-editor of Challenges for Central Banking: Perspectives from Latin America and the lead editor of Global Rebalancing: A Roadmap for Economic Recovery, published by the IMF.

Heather Sutton is a research consultant for the Inter-American Development Bank on issues of citizen security. Her work has involved designing, implementing, and analyzing surveys of victimization and violence against women. She has published a book and academic papers in peer-reviewed journals and the IDB’s working paper series, focusing on issues of crime and violence, with special attention to prevention. Prior to joining the IDB, she worked for over a decade as a consultant for the International Center for the Prevention of Crime, the United Nations Office of Disarmament Affairs, and Brazil’s Instituto Sou da Paz.

Kalin Tintchev, a national of Bulgaria, is an economist in the Caribbean III Division of the IMF’s Western Hemisphere Department (WHD). Prior to joining WHD, he worked for more than 10 years in the IMF’s Monetary and Capital Markets Department, where he participated in Financial Sector Assessment Programs and technical assistance missions on stress testing. He holds a Ph.D. in economics from the George Washington University and an M.B.A. with a concentration in finance from Vanderbilt University. His research focuses on financial stability, contagion, and macrofinancial linkages.

Jarkko Turunen is deputy division chief in the IMF’s Asia and Pacific Department. Previously, Mr. Turunen worked in the IMF’s Western Hemisphere Department as mission chief to The Bahamas. Before joining the IMF, he was principal economist at the European Central Bank and visiting scholar at the Economics Department of the Massachusetts Institute of Technology. He holds a Ph.D. in economics from the European University Institute. His main research interests are in macroeconomics, monetary policy and labor economics, with publications in the Journal of the European Economic Association, Journal of Economic Perspectives, IMF Economic Review, Journal of Economic Dynamics and Control, Empirical Economics, and Economics Letters.

Bert van Selm is a deputy division chief in the Caribbean II Division of the IMF’s Western Hemisphere Department. He was the IMF’s resident representative in Jamaica from 2013 to 2016. He holds a Ph.D. in economics from the University of Groningen in the Netherlands. He has published several articles on international economic issues and one book: The Economics of Soviet Break-Up (Routledge, 1997).

Alejandro Werner, a Mexican citizen, has had distinguished careers in the public and private sectors as well as in academia. Most recently, he served as undersecretary of finance and public credit of Mexico (December 2006 to August 2010), professor of economics at the Instituto de Empresa in Madrid (August 2010 to July 2011), and head of corporate and investment banking at BBVA-Bancomer (August 2011 to December 2012). Previously, he held the position of director of economic studies at the Bank of Mexico and professor at Instituto Tecnológico Autónomo de México. He has published widely and was named Young Global Leader by the World Economic Forum in 2007. Mr. Werner received his Ph.D. from the Massachusetts Institute of Technology in 1994.

Joyce Cheng Wong, a national of Portugal, is an economist in the IMF’s Western Hemisphere Department. She holds a Ph.D. in economics from New York University. Her research has focused on drivers of female labor participation, financial inclusion and development, and immigration.

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