WASHINGTON, CMC – The acting director of the International Monetary Fund (IMF) Western Hemisphere Department, Nigel Chalk, Thursday said. At the same time, the Citizenship by Investment Programme (CBI) has been critical to Caribbean countries. There is a need for the region to understand that the revenue generated from the program “is very volatile.”
Under the CBI program, several Caribbean countries provide citizenship to foreign investors in return for them making a significant contribution to the socio-economic development of these countries.
Addressing a news conference on the economic outlook for Latin America and the Caribbean, Chalk told reporters that the CBI had been an essential feature of the Caribbean and that the Washington-based financial institution “has been genuinely supportive” of the initiative.
“They generate significant amounts of revenues for the country, and those revenues offer the potential to be deployed in a range of areas, and there are lots of needs, including to some extent social spending, but also the region is very prone to hurricanes and there’s a lot of need to make the infrastructure more resilient to adapt to climate change…
“I think, on the whole, the CBI program is essential in these countries. I would point out two things.
“First of all, this revenue is very volatile, so you have to be very careful in spending that revenue in a lumpy way. We prefer a system where the CBI revenue is saved. Some spending is derived from that revenue, basically through the stream of income that those savings create, and that’s a more stable system rather than having stop-go spending linked to depending on how much CBI revenue you get in a year.”
Chalk said he believes it is also essential to maintain the integrity and improve schemes such as the CBI “given their reliance on the recognition by some of the larger economies” as he welcomed the move by the Eastern Caribbean Currency Union (ECCU) to improve “the integrity of these schemes in conjunction with some of the larger economies.”
About the Caribbean tourism sector, Chalk said the IMF believes that the United States economy will grow “pretty strongly” and that one of the aspects within the US economy is the shift from goods consumption to services consumption.
“So even though their economy is slowing, that shift from goods to services should be good for the Caribbean. It is suitable for tourism-dependent economies because Americans travel more, investing more in leisure activities.
“I think we have seen across the Caribbean it has proven quite a big boost to the economies. We don’t see a recession. We feel that the potential flow of tourism will be maintained, but I think it will be prudent for the countries in the region to think about what to do if it were to slow or if the US were to slow down”.
He said the regional countries should also have a strategy to deal with the possibility of the interest rates in the US going higher to bring down inflation.
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