Eastern Caribbean nations have been at great pains to point out that seeking help from the International Monetary Fund (IMF) is not a sin. “People meet me all the time, ‘I hear you gone to the IMF’, as though I gone to hell,” complained St Vincent and the Grenadines Prime Minister Ralph Gonsalves.

Within the past few months, five member countries of the Organisation of Eastern Caribbean States (OECS) have sought low-interest funding from the IMF to help meet revenue or other shortfalls. St Vincent, Dominica and St Lucia requested financing under the IMF’s Exogenous Shocks Facility; Grenada has requested continuation of a poverty reduction scheme; and St Kitts and Nevis received funds under the emergency assistance for natural disasters facility.

The sums involved are not huge—US$5.1 million was approved for Dominica on July 13—but Caribbean governments historically get nervous with any mention of IMF financing. The last year or so has proved very difficult for OECS nations, as it has for many countries around the world. The Eastern Caribbean Central Bank says that, taken as a whole, the sub-region experienced an economic slowdown in 2008 to 2.2 per cent from 5.7 per cent in the previous year.

Job levels fall
That trend has intensified in the first quarter of this year, which has seen a 3.9 per cent drop in gross domestic product over the comparative period a year ago. Tourism, construction, manufacturing and retailing have all suffered. “In addition, inflows of foreign direct investment and remittances were estimated to have contracted, business confidence fell and unemployment levels increased,” OECS finance ministers said in a 9 July communique. It is against that background that the countries in the sub-region have sought IMF financing. The popular vehicle is the exogenous shock facility.

According to the IMF, “an exogenous shock is an event that has a significant negative impact on the economy and that is beyond the control of the government.” Gonsalves has been critical of media reporting of the IMF loans. As Caribbean countries are fond of saying, this current economic crisis did not start in their area. Key features of the shock facility include rapid access to funds and low interest payments—loans carry an annual rate of 0.5 per cent.

www.BBCCaribbean.com