GOVERNMENT OF THE REPUBLIC OF TRINIDAD AND TOBAGO
OFFICE OF THE PRIME MINISTER
The Honourable Kamla Persad-Bissessar, S.C., MP
Prime Minister of the Republic of Trinidad and Tobago
United Nations General Assembly Thematic debate
“The UN and Global Economic Governance”
Monday 15th April 2013
New York, United Nations, (NLB, Conference Room 4)
Thank you, Your Excellencies Vuk Jeremic, President of the General Assembly and Jan Eliason, Deputy Secretary-General of the UN, for your insightful comments and for setting the parameters within which these high-level discussions will proceed.
Mr President, I am privileged to address this high-level debate on Global Economic Governance.
I also commend you on the timing of this discussion, scheduled as it is, in the run up to the International Monetary Fund’s Spring meetings in Washington later this week.
This debate is an ideal platform for the dialogue which I believe must take place among:
- international financial institutions;
- informal groupings such as the G20, and the
- wider international community as we continue to search for a way forward and a way out of the deepening financial crisis.
Notwithstanding the important role of these processes I believe that the General Assembly must play a major role in global economic governance.
Consequently, Mr President, I congratulate you for convening this important debate.
Shocks of the global financial crisis
Mr President, while Trinidad and Tobago, because of its energy-driven economy, international reserves and lower public debt level may have escaped the worst shocks of the global financial crisis in the first round, many of our CARICOM neighbours as well as other small states have not been so fortunate.
At this juncture the global economy remains in a precarious state.
Developed economies continue to face multiple challenges, while partly due to the contagion effects of the Euro area crisis, growth in some major emerging market economies has slowed in recent months.
While the resolution of the crisis has been long in coming, it is clear that the full extent of the problem is not yet evident. The initial concerns were about Italy, Spain and Greece.
Now the most recent focus has been on Cyprus, and questions continue to be asked about which country will be affected next.
Thus it is easy to understand why we, in our Region, look on with anxiety at the uncertainty that the global economy faces.
Europe is experiencing difficulties generated by the debt crisis.
Among the advanced economies, the US economy is recovering, but at a slow pace, from the deep recession of prior years.
Economic and social prognosis for Small States
The economic – and by extension social prognosis – for Small States is therefore even more difficult
In the CARICOM Region, we remain highly susceptible to external shocks.
Our economies are dependent on the United States and European markets for trade, foreign direct investment, tourism and remittances.
As many would be aware, the global financial and economic crisis has and continues to reduce foreign exchange inflows from these sources, which in turn has affected macroeconomic performance, reduced growth, employment and income levels and worsened poverty levels.
High food and fuel prices are heightening concerns about food and energy security.
In addition, sovereign debt problems in some countries have led them to the doors of the IMF and World Bank.
Access to global capital markets
Mr President, access to global capital markets is important for small states.
External private markets tend to see small states as significantly more risky than larger states, hence making market access more difficult.
In particular, access to concessional financing is critical for CARICOM countries, specifically for those with high debt burdens.
IMF lending facilities improvements
We therefore welcome, Mr President, the improvements made to the lending facilities of the International Monetary Fund in recent years with the introduction of the:
- Flexible Credit Line,
- the Precautionary Credit Line,
- the Post Catastrophic Debt Relief Trust,
- the reform of the concessional lending facilities to Low Income Countries, and more recently
- the introduction of the Rapid Financial Instruments.
Facility for the highly-indebted disaster prone middle income
However, a gap persists, as concessional financing for Small States is still inadequate.
A facility for the highly-indebted disaster prone middle income countries is missing.
With dwindling donor support and the erosion of trade preferences for agriculture, we in CARICOM need to simultaneously engage several strategies to ensure our survival.
- lower debt to create fiscal space,
- diversify narrow productive bases,
- reduce dependence on US and European markets,
- create new ties with Emerging Market Economies; and
- improve our competitiveness.
You would appreciate that such strategies require time, finances and support from the international community.
We need to employ new strategies in order to address this critical question.
As such CARICOM and other Small States, need to focus on the following:
- Concessional financing for infrastructural development
- Access to markets for our products including tourism
- Debt relief for highly indebted countries and
- Technology transfer
Lines of credit to economies facing external shocks
Additionally, more importantly for our Region, we embrace external buffers, put in place by institutions such as the International Monetary Fund, which provide lines of credit to economies facing external shocks.
Trinidad and Tobago submits that safeguards are inadequate to resolve the problems in my region and others with small economies.
Small economies political presence in the deliberations of IMF
The old approach to doing things is not working.
It is for this reason that Trinidad and Tobago has taken the initiative to start a conversation within the Governance of International Monetary Fund to ensure that small economies are given a political presence in the deliberations of such bodies.
Trinidad and Tobago is using its position as the only CARICOM member of the G24, to advocate for greater dialogue with the G20 and the multinational lending organizations to give greater attention to issues facing small and vulnerable states.
The General Assembly as the voice of 193 member-states with equal status under the UN Charter must not be silent on this matter because the international financial and economic crises dictate the need for a global governance structure which takes into consideration the unique circumstances of small states.
Global economic governance
This new architecture must adequately address the concerns of all states.
But today such a governance structure is only a dream.
The General Assembly must develop mechanisms to make it a reality.
OECD’s grey and black lists
Mr President, some of the decisions adopted by organizations like the OECD have far reaching consequences on the economic and social welfare of developing countries.
For instance, the OECD’s initiative to put countries on grey lists and blacklists are having severe implications for some of our Caribbean countries.
This was a prime example of a long-existing disconnect, whereby large countries impose their policies on small states and low income countries without adequate consultation, consideration and engagement.
There is urgent need for a platform where the dialogue on issues concerning small states and low income countries (LDCs) could be incorporated at the global level and in those fora where major and far reaching economic decisions are taken.
This must apply in organizations like the G-20, but also the IMF, the World Bank and international agencies/bodies.
Voice of the LDCs
The voice of the developing and least developed countries must also be taken into consideration in discussions on improving global economic governance.
Some bodies for achieving this already exist such as the G-24.
However, there is need for a more inclusive and consultative mechanism whereby issues pertinent to small states can be addressed within the G-20 agenda.
Mr President, global economic governance also requires a need, for example, a realignment of the Chairs of the IMF Executive Board to give more voice to the Emerging Market and Developing Countries.
To conclude, Mr President, Trinidad and Tobago submits the following as imperatives for an improvement in global economic governance:
- Changes to the international architecture in which the IMF and G20 sit, lend themselves to a potential contravention of natural justice where clubs of large countries sit and develop rules for smaller states to follow without adequate consultation, considerations and engagement with small states
- The development of international financial regulation, supervision risk management and the assessment of financial sectors do not support a level playing field between small and large states.
- The preferential treatment given to areas important in some large states – from mortgages and regional bands to hybrid capital – treatment that proved so dangerous in the financial crisis, also penalizes institutions in small states beyond economic justification.
- The criteria of lending used by the multinational institutions is better suited to larger states with capital markets, credit ratings and diversified private sector players.
- The criteria used for long-term and short-term support pays too much attention to the level of GDP per capita and not sufficiently enough to the much higher levels of fragility and vulnerability to natural and economic shocks.
I therefore use this debate forum to once again call on the Managing Director of the IMF and the President of the World Bank to intensify attention on the issues of small, and vulnerable economies.
Ultimately global economic governance and reform, as articulated by the G24 central bank officials and finance ministers last year at the IMF-World Bank Annual General Meetings, “must reflect the growing role of emerging market developing countries as a whole in the global economy, while enhancing the voice and representation of poor and small low and middle income countries.”
I thank you Mr President.