Whenever Government decides to embark on any major development project – be it building a school to increase educational opportunities for young Saint Lucians, upgrading a highway to improve the flow of traffic, expanding the sea port to accommodate more cruise ships, or investing in low-income housing to meet a big social need -the foremost consideration is always money. Development financing!
So that when Commonwealth Finance Ministers meet at the Hyatt Regency Hotel from September 24 - 26 to review the current status of development financing, they will be discussing an issue critical to the future development of Saint Lucia, its Caribbean neighbours and other small developing countries. This year’s meeting, to be chaired by St. Lucia’s Prime Minister and Minister of Finance, Hon. Dr. Kenny D. Anthony, is hoping to achieve improved access to development financing for the majority of Commonwealth members which happen to be small states like Saint Lucia, as well as more favourable borrowing conditions.
Easy access to development financing is critical for small countries like Saint Lucia because they all lack the capacity to finance large projects out of their limited resources. As a result, whenever Government decides to undertake any major project, a pertinent question which always arises, is: where’s the money going to come from? Basically, there are three available options: Government can approach a development-oriented lending institution like the Caribbean Development Bank (CDB) for a loan; alternatively, it can seek to raise the financing on the capital markets but this is not an easy proposition for small countries; lastly, it can hope, with a stroke of good luck, that a traditional donor like Canada would agree to foot the bill through its foreign aid programme.
Not so long ago, most development projects in the Caribbean were financed with foreign aid. Particularly in the 1980s when Cold War rivalry for influence between the U.S.-led capitalist West and the former Soviet-led communist East was at its height in the region. During this period, millions of dollars in development assistance poured in from the United States, Canada, Britain and other Western donors. The money was used for a variety of purposes: to build roads, schools, hospitals, and ports, put down other vital infrastructure, and finance human resources development programmes to provide countries with the various skills needed for development.
Unfortunately for Saint Lucia and other regional countries which find themselves today at a crossroads in their development and grappling with increasingly difficult challenges, such large-scale generosity is now a thing of the past. The December 1991 collapse of the Soviet Union which signaled the end of the Cold War, set the stage for a fundamental reshaping of the traditional relationship between the West and developing countries over the past decade. The extent of the changes took most developing countries by surprise as little advance notice was given. Instead of relying on aid to drive their development, developing countries suddenly started hearing that developing trade was the better alternative.
In other words, developing countries were told to start standing on their own feet. Saint Lucia received a double whammy which coincided with the virtual drying up of official aid. Another important plank in its modern development – the longstanding preferential regime which guaranteed access to the British market for Windward Islands bananas – started tumbling down. These two external factors, over which Saint Lucia has had no control, have caused a significant reduction in income in recent years. Compounding the problem has been a sharp fall in the value of the Pound, the currency in which payment is made for Saint Lucian bananas. The effect has placed a damper on Saint Lucia’s and the region’s development prospects at a time when they could effectively use such lost income to help finance the transition to globalization.
The choice of “Financing for Development” as the theme of the forthcoming Commonwealth Finance Ministers meeting, continues the Commonwealth’s crusade to give prominence to the issues and concerns affecting small developing countries. Topics on the meeting’s agenda include a new Financing for Development framework which reflects the reality of globalization, a review of the conditions attached to loans from the World Bank and International Monetary Fund (IMF), enhancing debt relief for the most heavily indebted countries, and looking at how to make the capital markets more accessible to developing countries. The majority of Commonwealth members are small states.
The Commonwealth meeting, therefore, presents a timely opportunity for Saint Lucia and other developing countries facing similar challenges, to assess recent development experiences and seek, through the Commonwealth - the second largest international organization after the United Nations - to favourably influence the global development agenda. This year’s Commonwealth Finance Minister’s meeting comes six months before the United Nations convenes an International Conference on Financing for Development, to be held in Mexico next March. The conference is taking place in response to concerns expressed by world leaders at their September 2000 UN Millennium Assembly, about ?the obstacles developing countries face in mobilizing resources needed to finance their sustained development”.
The Commonwealth Finance Ministers meeting also provides an opportunity for Saint Lucia and other developing countries to contribute to shaping the agenda of the upcoming annual World Bank/IMF meetings, an important forum where key economic decisions affecting all countries are made. Both meetings in Washington were to be held immediately following the Commonwealth Finance Ministers meeting in Saint Lucia, but have been postponed as a result of the World Trade Center disaster in the United States.