Overview

The OECS comprise a diverse set of countries that share small, open economies and because of their geographical location are highly prone to natural disasters. Because of their size, they also tend to specialize in few products and services but cannot benefit from economies of scale.  Private remittances are significant, and in some countries exceed the value of export. These countries rely extensively on tourism and agriculture, but do not have a diversified enough market for their products and services and, as a result, are subject to excessive volatility.

The impact of the 2008 global financial crisis was severe as tourism, remittances, and financial activity decreased sharply, growth rates plummeted, debt and fiscal imbalances increased to high levels, and labor market conditions deteriorated. With decreasing productivity and weak external demand in key sectors, decreasing FDI, and continued structural weaknesses, these impacts are still lingering today.

While OECS countries have made overall progress in achieving the Millennium Development Goals (MDGs), challenges remain. Despite high human development indices, OECS countries have not succeeded in reducing poverty to levels compatible with their level of income per capita. The official poverty rates, which are estimated using each country's national poverty line, vary from 18 percent to 38 percent. The majority of the poor are found in rural areas where about half of the population lives. Studies report that female-headed households, which account for two-thirds of all households in the sub-region, are more likely to be poor. 

Unemployment has risen in most OECS countries in the aftermath of the global financial crisis. Lower demand for OECS exports and services resulting from the 2008 crisis exacerbated the already high pre-crisis levels of unemployment in most OECS countries. Unemployment is higher among the poor and in some of the OECS countries, 35 percent are unemployed. Youth unemployment is a source of particular concern.

For OECS governments, the priorities are to promote inclusive growth, generate employment, and increase economic and social resilience.

Last Updated: Mar 30, 2015

A new Regional Partnership Strategy (RPS) covering the period FY15-19 was launched in November 2014 and focuses on creating the conditions for sustainable and inclusive growth in Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia and St Vincent and the Grenadines.

The RPS is anchored on the Comprehensive Debt Framework (CDF). This framework acknowledges the multifaceted nature of the OECS challenges and aims at helping governments in the design of country specific solutions to their high indebtedness. The CDF focuses on the interrelated areas of improvements in competitiveness, reduction in sovereign debt levels, fiscal adjustments to ensure macro sustainability, and enhanced resilience to shocks are interrelated aspects. OECS governments have embraced the CDF framework and used it in framing their own reform strategies and priorities. 

The strategy also takes into account feedback received during consultations with Governments, representatives of the private sector and civil society organizations, and bilateral and multilateral partners.

The objective is to contribute to laying the foundations for sustainable inclusive growth through three areas of engagement: (i) competitiveness, (ii) public sector modernization, and (iii) resilience.

Constrained in general by the small size of investments in the OECS, the IFC and MIGA will contribute to the RPS objectives through selective investment support, depending on opportunities. The IFC will focus on crisis response; job creation and inclusive growth; innovation, competitiveness, and integration; and climate change.

 The indicative IBRD lending program for the six OECS countries is expected to be around US$120 million, comprising up to a maximum of US$20 million for each OECS country for the period of the RPS (FY15-19). In addition to the IBRD envelope, four OECS countries (Dominica, Grenada, St. Lucia, and St. Vincent and the Grenadines) can also count on an IDA national allocation and can leverage additional regional IDA resources, consistent with the IDA regional allocation criteria. The IDA17 (FY15-17) allocation for the OECS is equal to SDR 61.3 million. Currently, there are no active lending operations in St. Kitts and Nevis.

 The six OECS countries are part of the Caribbean Growth Forum (CGF), which is a multi-stakeholder initiative with the aim to identify, prioritize and implement a set of reforms and measures for unlocking growth in the Caribbean and promoting participatory public policy making. The CGF is led by the World Bank, the Inter-American Development Bank, and the Caribbean Development Bank, in collaboration with the United Kingdom Agency for International Development and the Canadian International Development Agency.

Last Updated: Mar 30, 2015

Important results have been achieved during the past several years in Government projects financed by the World Bank.  These include:

Social services:

  • The Bank supported over 2,000 unemployed youth in St. Lucia and Grenada to receive training and regional and internationally recognized certification in competency-based skills that would enable them to secure employment beyond individual countries.
  • A regional occupational standards framework to improve the quality and relevance of technical and vocational education in Saint Lucia and Grenada was established. Both Saint Lucia and Grenada were authorized by the Caribbean Association of National Training Agencies (CANTA) to issue regional certifications.
  • Nine OECS Member States developed and endorsed a results-based regional education strategy “Every Leaner Succeeds”, which provides a framework for a regional approach to achieving quality education for all in the OECS.
  • The first regional education statistical digest for nine OECS countries was published, and constitutes the baseline for monitoring the implementation of the regional education strategy.

Building resilience:

  • Within a few weeks of the December 2013 flash floods in Saint Lucia and Saint Vincent and the Grenadines, the World Bank had a team on the ground assisting with the damage and risk assessments and was able to mobilize some emergency funds available to support the governments’ recovery effort including debris removal, construction of temporary road infrastructure and to cover other emergency operation costs. The Bank responded quickly in mobilizing resources from the current portfolio and the International Development Association (IDA) Crisis Response Window.
  • Saint Lucia’s success in addressing landslide hazards in urban communities is a result of the innovative and solution-oriented engagement of community members, landslide researchers, and government practitioners and policy-makers. The Management of Slope Stability in Communities (MoSSaiC) approach was established by researchers from the University of Bristol committed to providing a community-based and scientific approach for delivering landslide hazard reduction measures on the ground.
  • In Grenada, 1,500 farmers received technical assistance and financial support to buy seeds, fertilizer, pesticides and tools, and protect themselves from climate and economic shocks especially after two consecutive hurricanes.
  • The OECS-Catastrophe Insurance Project has allowed countries to join the Caribbean Catastrophe Risk Insurance Facility. The Facility serves as a joint reserve mechanism where participating governments can obtain coverage (insurance) that gives them the ability to access a quick financial payout in the event of a catastrophic natural disaster. Overall, this insurance has been a success, providing the much needed liquidity promptly following a catastrophic weather-related event and has helped reduce the vulnerability of OECS to natural hazards and the impacts of climate change.
  • Nine new e-governance services including e-procurement for pharmaceuticals, e-tax filling system, will be established in 2014 in Dominica, Grenada, St Lucia and St Vincent and the Grenadines to improve government services across the region.
  • An inventory of public buildings and critical infrastructure in Grenada and St Vincent and the Grenadines was conducted as a first step in establishing a database for the conduct of vulnerability assessments.

 

Competitiveness

  • The number of subscribers of Broadband Services per 100 people went from 2.88 percent in 2008 to 13.7 in 2011. Broadband performance (in terms of downloading speed) more than doubled in Grenada, Dominica and St. Lucia, and increased by more than 50 percent in St. Kitts and Nevis during the same period. The quality of service improved as well. The Telecommunications and ICT Development Projects also increased the use of information and communication technologies among rural underserved communities, persons with special needs, and contributed to improve communications, collaboration, e-learning and research for students.

 

Creation of Alliances for Reform

  • A balanced scorecard system is now used by Governments to report periodically on each agreed activity, and Citizen Observatories have been established to monitor the execution of the national budget.

Last Updated: Mar 30, 2015


LENDING

Organization of Eastern Caribbean States: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments