By Unity Labour Party
The issue
Small Island Economies (SIEs), alternatively and more widely-known in the global political economy as Small Island Developing States (SIDS), are marked by their vulnerability from external shocks (economic, political, pandemics/epidemics) and rampaging deleterious, climate change in the age of the Anthropocene (human-centred global warming). These external shocks and adverse climatic change compound markedly the internal vulnerabilities which derive from small size (land mass and population) and limited material, economic resource coupled with legacies of underdevelopment sourced from colonialism, and in many cases including in the Caribbean, from native genocide and the enslavement of African bodies.
The World Bank Group (International Bank for Reconstruction and Development [IBRD] – the World Bank – and the International Development Association [IDA]) have put down a marker to revamp, to the disadvantage of the SIEs, the concessional loans from IDA. Among the seventy-five countries in IDA’s borrowing constituency for its generous concessional loans are the small-island states of Dominica, Grenada, St. Lucia, and St. Vincent and the Grenadines; similar SIEs in the Pacific, Asia, and Africa are in this grouping of IDA’s constituency; so, too, are poor countries, globally, including some with large populations and significant land mass.
A few weeks ago, the World Bank–IDA made it known that it was actively considering essentially doubling its annual rate of interest to IDA countries from a range of 2 percent-to-4 percent to a much less generous rate of between 3.3 percent-to-6.8 percent, and slashing the period of the amortization of IDA loans from 50 years (40 years plus 10 years grace) to 35 years (30 years plus 5 years grace).
Immediately, the government of SVG sprung into action in leading a global struggle against this planned policy shift by the World Bank-IDA. In the forefront of this struggle have been our Prime Minister and our Minister of Finance. As a consequence, the World Bank–IDA has been put on the defensive but it is still pursuing its plan. Let us summarise the essence of this struggle, the outcome of which has grave implications for vulnerable SIEs.
World Bank-IDA’s plan
Essentially, the relevant officials and structures in the World Bank Group are claiming that countries such as SVG, by virtue of their successes in increasing their average annual per capita incomes to above US$7,805 are graduating themselves out of the condition for the existing generous terms for loans from IDA. The World Bank–IDA insists that these generous terms ought to be available to “the poorest” countries in the IDA constituency. In short, the World Bank-IDA is pitting the most vulnerable against the poorest countries.
SVG’S response
Immediately upon being made aware of this nefarious World Bank-IDA plan, SVG’s Prime Minister, Comrade Ralph mobilized the leadership and membership of the Organisation of Eastern Caribbean States (OECS) and the Caribbean Community (CARICOM) to engage actively in this existential battle on an ongoing basis and pointedly at the just-concluded Spring meeting on an ongoing basis and pointedly at the just-concluded Spring meeting of the World Bank Group and the International Monetary Fund (IMF) in Washington, United States, in April, 2024.
Immediately, too, on April 12, 2024, Comrade Ralph wrote, and signed personally, over 200 letters to each of the Heads of State and Government of the 193-member countries of the United Nations (they are members of the World Bank Group) plus letters to the President of the World Bank, the Secretary General of the United Nations, the Chairman of the African Union (AU), the Chairman of the Non-Aligned Movement (NAM), who is also the current Chair of the Group of 77, the Chair of the Association of South East Asian Nations (ASEAN), the President Pro-Tempore of the Community of States of Latin America and the Caribbean (CELAC), the Secretary General of CARICOM, and the Director-General of the OECS. Additionally, our Prime Minister copied his letter to the President of the World Bank to the said Heads of State and Government and the distinguished heads of international and regional political groupings listed above. Our relevant Caribbean official in Washington, Christopher Sinckler (former Finance Minister in Barbados), our Alternative Executive Director at the World Bank Group – essentially our Constituency Representative — and Comrade Ralph have been keeping each other informed on the issue.
So, by the time Camillo (SVG’s Finance Minister) and his delegation (Director General of Finance and Planning, Edmond Jackson, and Director of Economic Planning, Recardo Frederick — excellent public servants) arrived in Washington for the World Bank/IMF meetings in April 2024, Comrade Ralph’s letters were already being discussed by the officials of the World Bank Group, the IMF, and the Heads of Delegation.
In a meeting between the Caribbean constituency and the World Bank – IDA’s officials in Washington, Camillo was accorded the privilege of leading the discussion for the Caribbean. His laser-focus was on the immoral and unacceptable plan of the World Bank–IDA to reconfigure the terms of IDA’s concessional loans to the detriment of vulnerable SIEs, including SVG. Our stance was supported by the entire Caribbean constituency, including Barbados, Antigua and Barbuda, St. Kitts and Nevis, and Trinidad and Tobago which are not in the borrowing constituency of IDA on account of their relatively higher average annual per capita incomes. The World Bank–IDA was put on the defensive, and their attempts to shift the conversation to matters more pleasing to them were unsuccessful, indeed, rebuffed. The Caribbean stood together.
SVG’s rationale
At the meeting, Camillo emphasized the central elements of Comrade Ralph’s letters:
- It is a species of public immorality unworthy of the World Bank-IDA to pit the most vulnerable countries against the poorest.
- The vulnerabilities of the SIEs, including SVG, to external shocks and climate change impacts, are sourced, overwhelmingly, to the wealthy developed countries. Thus, we should not pay the price for the wrong-headed actions, and inactions, of the wealthy nations.
- Rather than reduce the available monies for loans from IDA and harden the terms of the concessional loans, the rich and the larger emerging economies should put more resources in IDA, make the terms more favourable, and expand the eligibility of other vulnerable countries (such as Barbados, Antigua-Barbuda, St. Kitts-Nevis) for IDA loans.
- The World Bank-IDA cannot maintain any serious credibility if it decides to go in the opposite direction of enlightened global thinking by penalizing the vulnerable for succeeding against terrible odds.
- Financing, adaptation and mitigation requisites (sea and river defences, airports, seaports, hospitals, etc.) arising from climate change demands very cheap money for at least 50- years amortization periods, and GRANTS from wealthy nations. Peace, security, global stability, and prosperity would remain illusions — “fleeting illusions” in Bob Marley’s formulation — if the nations of the world are unequally yoked to the extent that they have been for the last several centuries, and are still so today.
Camillo also mocked as an absurdity the World Bank-IDA arguments that less money is available because of wars such as in “Ukraine and elsewhere.” All reports are that Camillo’s representations were compelling, focused, and eloquently expressed.
World Bank-IDA replies
On April 26, 2024, the Vice President of Latin America and the Caribbean Region of the World Bank Group C. Felipe Jaramillo, replied to the letter of Prime Minister Dr. The Honorable Ralph E. Gonsalves, on behalf of the World Bank Group.
In his letter to our Prime Minister, Vice President Jaramillo expressed his “understanding” for our Prime Minister’s “concern, and rightly so.” Vice President Jaramillo further sought “to explain and clarify” the following:
- During IDA20 Mid-Term Review in Zanzibar a few months ago, IDA participants discussed “a proposal to recalibrate financing terms for Small States with incomes above the IBRD Graduation Discussion Income (GDI)”. [Please note that this was IDA’s proposal.]
- This proposal was not endorsed at Zanzibar. Instead in February 2024 the World Bank’s Executive Board “approved a moratorium on hardening of financing terms in financial year (FY24) and FY 25 for IDA countries in good standing with IDA’s Sustainable Development Financing Policy.” [Our Emphasis]
- “As part of the IDA21 replenishing process, Bank Management is currently exploring several different options to calibrate the financing terms to incentivize sustainability and ensure IDA’s long-term financial sustainability while, at the same time, considering IDA countries’ deteriorating economic conditions, risk of debt distress and vulnerability.”
- “At this stage in the IDA21 replenishment, we [IDA] are exploring difficult options to accomplish this goal. No proposals have been put forward and no decisions have been made. Any proposal will consider the unique challenges and vulnerabilities of Small States. We expect to have more clarity by the next IDA21 replenishment meeting that will take place in Nepal this coming June, but discussions will only be finalized in December.”
Clearly, the World Bank-IDA has not dropped its proposal to harden the financing terms for IDA countries for the IDA-21 Replenishment which commences in June-July, 2025. It still intends to tighten the financing noose around the metaphoric necks of vulnerable countries who against odds are making things better for their people; but the vulnerabilities remain and the sources of those vulnerabilities are in the rich and powerful countries. Public immorality on this matter still looms in the bosom of the World Bank-IDA. The proposal in Zanzibar came from the World Bank-IDA; it is pretending that it came from Mars!
The struggle continues
The World Bank-IDA is on the defensive at the moment. But this “empire” will not relent without further struggle by the vulnerable countries in partnership/solidarity with the poorest, and the enlightened in developed countries.
Next month in Antigua-Barbuda at the UN Small Island States Conference is one immediate staging post in this battle. In September, 2024, at the UN General Assembly there is another big opportunity globally to continue the fight. Meanwhile we must carry-on the battle within the belly of the World Bank-IDA grouping itself, including with its major shareholders and contributors.
Meanwhile in SVG
Meanwhile in St. Vincent and the Grenadines, the opposition NDP and their ignorant fanatics/fellow-travelers on radio, predictably frame this issue as they do all issues, through the prism of their parochial political eyes: “World Boss Ralph-The Comrade” against “World Bank”. So, they query stupidly: “Who will prevail?” These idiotic people stand askance as though this momentous struggle has nothing to do with them. Their narrow, backward perspective centres on their quest for power in our small SVG; it is all about Ralph; it has no other focus — nothing national, nothing people-centred. It is all about how these backward people advance their own personal and narrow political agenda. This is a species of colonial-minded sickness! The anti-national, anti-people oppositionists of all stripes must be rebuffed and defeated, politically.
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