Caribbean nations have achieved some important economic successes over the last two decades, in often unpromising circumstances. For the most part, the region has enjoyed economic and political stability, its social indicators are good, and on average incomes are high relative to other developing countries in the Western Hemisphere. But growth has been relatively modest. And crucially, it has not been strong enough to bring about significant reductions in what remain distressingly high rates of unemployment and poverty.
This mixed picture makes it more important now than ever for the Caribbean to tackle head on the policy challenges that confront it. Sound policies are especially important in the Caribbean, because economies here are more vulnerable to external shocks than most. Many countries have made progress in diversifying their economies over recent years. But in many cases the structure of exports remains concentrated on just a few products. Many countries also rely on preferential access to markets for these exports. This is likely to be eroded and eventually lost as trade liberalization continues. The Caribbean is also seeing inflows of external assistance decline steadily.
In the face of these vulnerabilities, what are the key challenges policymakers face on the threshold of the new millennium? Let me briefly mention three: bolstering domestic financial systems, strengthening fiscal policies, and boosting competitiveness.
Many countries in the Caribbean are already addressing these challenges with courage and conviction. Reform efforts will succeed only when governments and electorates alike are committed to them and recognize their long-term benefits. Our role at the IMF is to provide support and assistance where we can and where we are wanted.
Our deliberations here this week will help the IMF in its efforts to develop a research agenda that is more relevant to the needs and circumstances of Caribbean nations. We already have work under way on several relevant topics like bank supervision and regulation, fiscal reforms, labor market and competitiveness, interest rate and exchange rate policy, and external debt management and vulnerability.
Another initiative is the creation of the Caribbean Regional Technical Assistance Center. This will bring together several regional and international institutions to improve the range and quality of technical assistance available to Caribbean nations. It will concentrate on budget management; tax reform; tax and customs administration; bank supervision; and monetary, fiscal, balance of payments, and national accounts statistics. This collective approach will allow the pooling of resources, permit greater collaboration between institutions, and provide for more effective follow-up between the users and providers of assistance.
I hope that these efforts make clear the IMF’s determination to improve the service that we offer to our members in the region. Ultimately, the destiny of any nation lies in its own hands. But, together with our colleagues in other international institutions, we hope and believe that we can play our part in helping the Caribbean fulfill its economic potential.