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STATEMENT BY THE ATLERNATE GOVERNOR FOR BELIZE DR. CARLA BARNETT Madam Chair, Honourable Prime Ministers, Members of the Board of Governors of the Caribbean Development Bank (CDB), President Bourne, Members of the Board of Directors, Management and Staff of the Bank, Ladies and Gentlemen: I am honoured to address this esteemed gathering on behalf of the substantive Governor for Belize, the Honourable Dean Barrow, Prime Minister of Belize. Prime Minister Barrow, regretfully, is unable to be here and has asked me to convey his best wishes for a productive meeting. On behalf of my delegation, I wish to express our appreciation to the Government and People of Canada, and especially to the City of Halifax, for the warmth of your welcome and the gracious hospitality you have extended to us during our stay. We feel most welcome and warm, cool climate notwithstanding. We would like, as well, to thank the conference organisers from CDB and from Canada on the exemplary arrangements for the meeting. You have worked very hard to make our environment conducive to a successful meeting and you have succeeded splendidly. We would like to congratulate Brazil on being accepted into membership of the Bank. We look forward to welcoming the Brazilian representatives to formally take their seat around our table in due course. Madam Chair, CDB has had yet another year of outstanding service in the development our countries. We congratulate the President and Staff of the Bank on that achievement. The Bank has focused on the issues of poverty reduction, improving economic governance, disaster mitigation, and regional integration. Our countries have benefitted from financing which has enabled us to expand road networks, improve the educational opportunities for our young people and children, and address other issues more specific to our individual territories and circumstances. In Belize, for example, the Basic Needs Trust Fund (BNTF) continues to make significant in- roads in the fight against poverty. Residents in rural communities across Belize now enjoy improved standards of living as a direct result of improved access to basic services and infrastructure made available through the BNTF programme. CDB was also ready and available to assist Belize last year with emergency financing as we dealt with the impact of Hurricanes Dean and Felix on our coasts. Although there have been many successes and tangible evidence of growth and development in the Region resulting directly from the Bank’s interventions, we still have far to go. In this context, I would like to make some comments on some issues that we feel should rank high among the Bank’s strategic priorities as we move ahead. -2- Madam Chair, we are meeting to discuss issues relating to the Bank’s continued operations in our Caribbean region under difficult global economic circumstances characterised by uncertainties in the international financial markets and rising fuel and food prices. Indeed, the rising cost of fuel and food, have triggered unrest in various parts of the world, including parts of the Caribbean. These developments, if not quickly and adequately addressed, threaten to increase poverty, social dislocation and economic instability. There is reason for grave concern. However, it is our view that continued partnership with the CDB can help us to mitigate the impact these developments will have on our economies. Strategies to tackle the rising price of fuel and food should address the need for both immediate and longer term solutions. Our countries are already responding to the crisis by reducing taxes on food and other goods in an effort to ease the burden on citizens. But this is a short-term response. As international prices continue to rise, as they are expected to, any reduction in taxes could soon be offset and domestic prices could resume rising. Some countries are also seeking to promote agriculture focusing specifically on food production by providing, for example, tax relief on agricultural inputs. Generally, these short-term strategies imply immediate budgetary impacts. We therefore encourage CDB to work with member countries to address the immediate response to the food crisis, less we erode the gains we have made in fiscal performance. There is a need for quick disbursing lines of credit to permit farmers to purchase fertilizers and other increasingly costly inputs to ensure that, at the very least, existing production levels do not fall because of lack of critical inputs. Farmers in Belize have already pointed out that fertilizers, most of which are by-products of the petroleum industry, have more than doubled in price in less than a year. Farmers in the rest of the region undoubtedly face the same reality. Therefore, the urgency of developing long-term solutions cannot be overstated. These solutions should be based on careful study and collaboration among regional and international agencies, governments and the private sector. In this regard, the discussion on the global food crisis which took place at this meeting was timely, and the commitment of CDB to further the discussion with member countries and agencies is very welcome. We strongly recommend that this work be given high priority. The rising food prices are a threat to social and economic stability; but they also provide a unique opportunity to create conditions for sustainable agricultural development in the Caribbean if the necessary investments are made, and quickly. Madam Chair, the effort of the Canadian authorities to implement a green approach to the arrangements for this Meeting is to be congratulated. In the Caribbean, there is a commitment to develop sustainable approaches to economic development. In Belize, for example, over 40% of our land area and a significant area of territorial sea have been given protected area status. But there are daily challenges that arise from the desire for development that will create jobs, reduce poverty and improve the standard of living of ordinary people. In addition to the challenges that arise from our own development activities, the impact of climate change - which is largely the result of activities of already developed countries, - complicates our quest for development. Increasingly powerful hurricanes, flooding and coastal erosion, cause significant physical destruction of economic infrastructure with consequential instability in growth, fiscal and debt indicators. These vulnerabilities are critical constraints to future development. In the present context of rising fuel prices, the focus on the environment also presents an opportunity for Caribbean countries to move more decisively in the direction of alternative and clean energy. We are therefore pleased that CDB, in its new strategic planning process, is seeking to place even greater priority on the issues of environment, disaster mitigation, adapting to climate change, including renewable energy. -3- Madam Chair, there is almost universal agreement that job creation per dollar invested is significantly greater in small and medium enterprises than in large firms. This makes small and medium enterprise development an obvious strategic focus for sustainable growth and poverty reduction. Yet, over the years, across the Region there has not been enough focus on enterprise development either at the national or regional levels. Throughout the Region there is a scarcity of financing for micro, small and medium-sized enterprises (SMEs). This is not a sector that is easily served by the traditional commercial banks or the newer types of financial institutions which have developed in some of our more developed member countries. We would like to invite CDB, in the context of developing its next strategic plan, to focus on SMEs with a view to developing new approaches and strategies for developing the sector. Madam Chair, our meetings this year have included further discussions on the seventh replenishment of the Special Development Fund. This Fund is essential to ensuring sustained positive impact of the BNTF programme, not only in Belize, but in the rest of the Region and especially in Haiti where the need is greatest. Although the global economic environment seems rather uncertain at this time, the Government of Belize hopes that negotiations will be successful and that members will continue to support the Bank in its efforts to assist our countries to address the critical issues that stand in the way of sustained economic and social development. Madam Chair, as I close, please allow me to say just a few words about recent developments in Belize. In Belize, GDP growth slowed 1.6% in 2007 as production and prices for key export commodities, such as farmed shrimp, fell significantly. The small but increasingly important petroleum sector grew; but a 7.6% decline in commodity exports, coupled with a 4.9% increase in imports, caused the current account deficit to expand. Fortunately, foreign direct investment in tourism, real estate, aquaculture and electricity led to a surplus in the capital account, which more than offset the current account deficit and resulted in an increase in gross international reserves. These reserves stood at about 2.3 months of merchandise imports at the end of 2007. While this is a notable improvement, the still low level signals the continued vulnerability of the Belize economy. In the first quarter of 2007, Belize successfully restructured its external commercial debt, reducing interest payments and deferring repayments to the 2019-2029 period. The concurrent approval of a policy-based loan by CDB assisted Belize in this process which sought to place Belize on a medium to long-term sustainable path. While the debt restructuring removed the threat of imminent crisis, fiscal and monetary restraint is still required to ensure fiscal and debt sustainability into the future, to protect the fixed exchange rate and build the foreign reserves. The new Government elected into office in February this year is fully cognisant of the delicate economic situation. It has pledged to implement, in particular, prudent fiscal policies set in the context of a sustainable medium-term framework. It has publicly stated its intention to restrict borrowing to bilateral and multilateral sources; and only as required to support important public sector investment projects as Government seeks to implement a development agenda focused on human resource development, poverty reduction, human security and sustainable use of environmental resources. The Government of Belize has committed to strengthening the framework for governance, a process that has already begun in the three months since the elections. In this regard, the focus is on strengthening oversight processes and the institutionalisation of more inclusive governance. There will be many challenges as we continue to pursue our development goals. We are however committed to moving forward, with the help of CDB. Madam Chair, as I close, please allow me to once again express thanks to you for your effective management of this Meeting, to our gracious hosts and, on behalf of the Government and People of Belize, sincere gratitude to the President and Staff of CDB for the support and assistance provided over the years. We look forward to a successful and productive year. Thank you.
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