CDB adopting a three-pronged approach to financing regional development

Last Updated on Tuesday, 20 June 2023, 13:27 by Denis Chabrol

CASTRIES, St Lucia, Jul 20 (DW).- The President of the Caribbean Development Bank (CDB), Dr. Hyginus “Gene” Leon on Tuesday said the regional financial institution was implementing a “trilogy” to deliver concessional financing to Borrowing Member Countries (BMCs), in what appears to be a major shift away from the conventional yardsticks of economic growth, and the total value of everything produced and the income of residents.

“We need to measure better to target better,” he said in his address to the 53rd Annual Meeting of the CDB’s Board of Governors being held in this tourism-dependent and natural resource-vulnerable Caribbean island.

Declaring that the use of Gross Domestic Product (GDP) and Gross National Income (GNC) was an insufficient proxy for development that would lead to an insufficient set of usual policies to grow GDP, Dr Leon recommended that delegates to push ahead the global development agenda by adopting beyond-GDP measures like the UN’s Multidimensional Vulnerability Index (MVI) as “our guideposts.” If that is done, he said that would lead to the creation of a broad GDP,  vulnerability, and resilience policy tool to target improving internal resilience capacity of a country, and its sustainable development. “Let us agree that in a world with a multiplicity of shocks, sustainability remains a dream unless we can conquer resilience,” the CDB President said.

Many economically disadvantaged tourism-dependent countries that potentially face the annual brunt of devastating hurricanes are classified as middle-income countries and so cannot access grants or low-interest loans.

In terms of delivering low-cost financing, Dr Leon announced that the CDB was blending Barbados’ Bridgetown Initiative, specific institutional reforms to make international development assistance and climate finance architectures more suitable for the 21st Century.

He said to complement the Bridgetown Initiative the CDB was exploring new and innovative ways to shape how concessional financial
assistance is allocated, including through the MVI/Internal Resilience Capacity/Recovery Duration Adjudicator framework.

Dr Leon said Multilateral Development Banks, including the CDB, were also designated as prescribed holders of Special Drawing Rights (SDRs) by the International Monetary Fund and can use these SDRs for loans, swaps, pledges in exchange for currency or settling financial obligations, among other purposes.

Concerning the adverse impacts of climate change- floods, droughts and storms- the CDB President added that there were also efforts underway to establish a more robust architecture to address vulnerable countries’ Loss and Damage needs including through the Santiago Network and the new Loss and Damage fund that United Nations Framework Convention on Climate Change (UNFCCC) Parties agreed to establish at COP27.

The CDB President said the region’s sustainable development also depended heavily on partnerships among the private sector, government and the international community. He explained that multilateral financial institutions could form partnerships to work on a projects with the same theme in more than one countries; knowledge creation through technology to improve global productivity. He added that national goals could be delivered effectively by combining useful differences between private and public sectors, breaking trust barriers and together focusing on the prosperity of each country.

Capacity building, he also identified, could be the basis for partnerships in developing centres of excellence to bridge skills gaps through technology across the Caribbean, particularly in new and emerging areas such as animation and gaming, robotics, digital media and Green Engineering. “This can expand skills sets and create jobs and business opportunities particularly for the youth and help to mitigate
some of the outward migration of our best and brightest young people,” he said.