St. John's -- July 4, 2008 --- Rising food and oil prices are hitting the Caribbean more than any other region in the Western Hemisphere, Inter-American Development (IDB) President Luis Alberto Moreno said July 3 in Antigua.
Moreno was among the speakers at the 29th Annual Meeting of the CARICOM Heads of Government Conference being held in Antigua and Barbuda, July 1-4.
According to IDB estimates, the average negative net impact of high oil and food prices on the trade balance for Caribbean countries (except Guyana and Trinidad and Tobago), is 5.4 percent of GDP, compared to 4 percent of GDP in the Central American countries.
Oil- and gas-exporting Trinidad and Tobago is benefiting from higher fossil fuel prices, while in Guyana the negative impact of high oil prices is partially offset by higher export prices for commodities such as rice, bauxite and gold.
IDB analyses show that the effects of high oil prices exceed those related to food in most of the Caribbean. Therefore, President Moreno offered the Heads of Government support from the IDB's SECCI initiative noting that a grant for Guyana related to biofuels is already in execution. Moreno mentioned the importance of the partnership with the Caribbean Development Bank (CDB) to extend the benefits of IDB programs in response to food and oil shocks to the Organisation of Eastern Caribbean States (OECS). This support will follow the grants already under preparation with the CDB for disaster risk mitigation and managing for results in the OECS.
Moreno said the IDB and the CDB are studying ways of reducing food prices in the region through an in-depth assessment of cost structures (transport, logistics, taxes and tariffs) and options for strengthening regional food production clusters.
The IDB and CDB are also designing a program in support of private sector development and competitiveness in areas such as access to finance, trade facilitation and trade negotiation capacity, innovation and value chain integration.
The IDB also plans to launch a US$500 million fast-disbursing credit facility to help countries strengthen their social protection networks and boost agricultural productivity.
The IDB is reviewing with government authorities the existing loan portfolio to see whether resources can be redirected from some projects towards new responses to the food crisis within each country.
In addition, the IDB has set aside at least US$20 million of the Social Fund—a grants program aimed at alleviating poverty—to study ways in which early childhood nutrition and other government programs, such as conditional cash transfers, can be made more efficient.
Finally, the IDB also has access to fiduciary funds created by donor member countries that can be used to finance specific aspects of the food crisis.