OECS: World Bank announces new regional partnership strategy for inclusive and sustained growth
World Bank press release No:2010/462/LAC
The World Bank Group today endorsed the Organization of Eastern Caribbean States (OECS) Regional Partnership Strategy for the next four years, which projects financial assistance of up to US$193 million, in addition to technical and advisory services. The strategy seeks to support economic stability, competitiveness, and inclusive and sustained growth. Additionally, the Board of Directors approved two operations for a total of US$20 million for St. Lucia and Grenada aimed at supporting policy reforms.
“This regional strategy was developed in close consultation with the OECS countries and is directly aligned with their short and medium-term development priorities,” said Yvonne Tsikata, World Bank Director for the Caribbean. “It is framed by the crippling effects of the global and regional crises, the need to protect social gains, and the OECS’ continued focus on deepening regional integration and cooperation.”
Owing to their small size and populations, the OECS countries face particular challenges in terms of infrastructure development and global market access. Their location also makes them vulnerable to periodic natural disasters and climate change impacts, such as rising sea levels. While they enjoy the benefits of very open economies, they are at the same time vulnerable to external policy changes, such as the removal of trade preferences and the still unfolding impact of the global financial crisis.
OECS countries have achieved clear gains in social progress and enjoy middle income status, but several countries face the challenges of youth unemployment, crime and public insecurity, as well as weak institutions. In addition, authorities are making a renewed effort to improve economic management, reduce public debt and improve the business environment.
The strategy focuses on two pillars:
1. Building resilience by promoting fiscal and debt sustainability, investing in people--particularly social safety nets, education and health--and developing climate resilience.
- Promoting fiscal and debt sustainability by strengthening debt management, enhancing efficiency and transparency of public spending, and improving service delivery across the region.
- Investing in people by better targeting social safety net systems, increasing the proportion of qualified teachers and the number of skilled post-secondary graduates, as well as improving data about the region’s chronic non-communicable diseases.
- Developing climate resilience through improved understanding of the vulnerability of critical infrastructure, a reduction in the number of people at high risk of landslides in St. Lucia, improved management of protected areas, and the establishment of financing mechanisms for critical ecosystems.
2. Enhancing competitiveness and stimulating sustainable growth by improving the countries’ domestic financial sectors, which includes improving the regulatory environment and supervisory frameworks for financial institutions.
The Bank’s program will be complemented by support from the International Finance Corporation (IFC), the private sector arm of the World Bank Group, through its financing and advisory services, focused on the following areas: improving investment climate, financial market development, energy and access to finance, infrastructure, sustainable tourism and emerging sectors in health, education and agribusiness.
St. Lucia and Grenada: US$20 million for policy reforms
As part of the new Regional Partnership Strategy, the Board of Directors also approved a total of US$20 million in loans and credits for St. Lucia and Grenada to support economic and social development policy reforms aimed at mitigating the adverse impact of the global crisis.
Given the decline in fiscal revenues under the current global environment, the impact of the global crisis particularly on vulnerable groups, and financial sector risks from the regional inter-linkages, the efforts supported by these operations are particularly important for maintaining macroeconomic stability and creating the fiscal space for social protection programs. These operations are the first development policy loans for both countries.
The US$8 million and US$3.5 million zero-interest credits for St. Lucia and Grenada, respectively, from the International Development Association (IDA) are repayable in 35 years, including a 10-year grace period.
The US$4 million and US$4.5 million commitment-linked, fixed-spread loans for St. Lucia and Grenada, respectively, are payable in 30 years, including a five-year grace period with level repayments of principal.