WASHINGTON, November 13, 2014 – The World Bank Group’s (WBG) Board of Executive Directors endorsed today the new Regional Partnership Strategy (RPS) for the Organization of Eastern Caribbean States (OECS) for the period 2015-2019, focused 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 new strategy proposes a lending program of about US$120 million for the period and, in addition, includes an allocation of about US$ 92 million for Dominica, Grenada, St. Lucia and St. Vincent and the Grenadines from the International Development Association (IDA), the arm of the World Bank Group that provides interest-free credits and grants to the world’s poorest countries as well as many small island developing states.
Over the last decade, the small Eastern Caribbean states have been trapped in a spiral of low growth, high debt and limited fiscal space. In the aftermath of the global financial crisis, unemployment has risen in most OECS countries, with youth unemployment becoming a source of particular concern, ranging from 34 percent in St Lucia to 42 percent in Grenada. The RPS is consistent with the regional approach adopted by the OECS Governments to tackle the long-standing issues of low growth and debt sustainability.
“This World Bank Group Regional Partnership Strategy, in its effort to promote growth, quite rightly focuses on regional integration and on the importance of coordination within the region and with the international financial institutions,” said Dwight Venner, Governor of the Eastern Caribbean Central Bank (ECCB).
Three new regional operations are proposed under the strategy, focusing on competitiveness, renewable energy, and human development. In addition, the World Bank is working in close partnership with the International Monetary Fund (IMF) and Caribbean Development Bank (CDB) to support governments’ efforts on fiscal adjustment and strengthening the financial sector.
“A number of countries have already embarked on strategies that foster investment in competitive niche sectors to unleash innovation and creativity, including tourism, agribusiness, health services and creative industries,” said Sophie Sirtaine, World Bank Country Director for the Caribbean. “Continued reforms to restore fiscal sustainability and boost private sector growth are needed. This strategy aims to tackle these challenges head on, with flexibility to respond to external shocks and build social and climate resilience of these small economies,” she added.
In line with the OECD national and regional development strategies, and in consultation and coordination with bilateral and multilateral partners, the World Bank Group identified three thematic areas for support:
- Enhancing productivity, competitiveness and employment: The cost of electricity in the OECS is among the highest in the world, and the WBG plans to support activities aimed at contributing to more predictable and lower energy prices to enhance competitiveness and inclusion. To improve the investment climate and attract foreign direct investment, the WBG will support increased access to regional broadband networks and development of ICT services; promote innovation and entrepreneurship through privately funded incubators and training; strengthen linkages between the tourism and agribusiness sector; as well as support the development and implementation of a comprehensive strategy to support the financial system.
- Modernizing the public sector: OECS governments are committed to implement fiscal consolidation measures to reduce fiscal deficits and promote sound and prudent debt management. In this effort, the WBG will support more effective and transparent public administrations, more robust institutional capacity and stronger frameworks for partnership with the private sector to meet the region’s growing infrastructure needs.
- Building social and climate resilience: OECS countries have universal education coverage, however learning achievement remains low and lack of adequate skills is cited as a top constraint by firms. The Bank will support vocational training for over 2,600 young people and help consolidate and improve the targeting of existing social protection systems. In addition, the Bank will continue to assist governments in strengthening their capacity to respond to natural hazards and adapt to climate change and rising sea levels.
The World Bank Group’s International Finance Corporation (IFC), the largest global development institution focused exclusively on the private sector, aims to expand its investment activities in the region’s financial sector and leverage private sector participation in infrastructure through public-private partnerships. During fiscal years 2009-2014, IFC committed US$165.6 million for six projects in the OECS. IFC also has advisory projects in every member state of the OECS, with a current portfolio of US$14 million focused on supporting the investment climate and public-private partnerships.
“IFC is working closely with private sector partners in the OECS to promote inclusive growth and job creation, supporting regional integration, addressing the challenges of climate change, and helping local economies recover from the financial crisis and build their resilience to economic shocks,” said Jun Zhang, IFC Senior Manager for the Caribbean. “In the coming years we expect to further develop investment support, especially in the areas of tourism, agribusiness, banking and financial inclusion, education, and renewable energy/energy efficiency.”
Improvements in the financial sector and development of the private sector in the OECS would also allow the WBG’s Multilateral Investment Guarantee Agency (MIGA) to play a stronger role and increase opportunities for investments.
