The Conference of Churches in Grenada and the Caribbean Debt Network just completed a two days conference with religious leaders on sovereign debt relief in the region with particular focus on the effect sovereign debt has on the most vulnerable members of society.
28 participants representing 9 countries and 6 religious denominations/organisations took part along with representatives of the Conference of Churches in Grenada, the Caribbean Conference of Churches and the Government of Grenada in a two-day Sovereign Debt Conference for Caribbean Religious Leaders.
The theme of the conference was “Together in Promoting a Just Indebtedness Workout.” The conference was held at “The Upper Room”, Blessed Sacrament Parish, Grand Anse, St. George’s, Grenada on 20th and 21st October 2015.
The Apostolic Nuncio, Archbishop Nicolas Girasoli attended the first session and pledged the support of the Holy See for the process which, he emphasised, must be seen as promoting justice and development. The Prime Minister of Grenada, the Hon. Keith Mitchell made a brief visit during which he expressed his appreciation for part the Conference of Churches in Grenada has played in the working out of Grenada’s sovereign debt and pledged to support the “Jubilee” process in region through his contacts with other political leaders.
The resource person from the United Nations Development Programme, Ms. Gail Hurley, delivered her presentation by means of an interactive Skype communication.
Mr. Jurgen Kaiser provided the technical and statistical data on the indebtedness of countries in the region and on the initiatives that have already been taken by other agencies to help resolve the situation. He also outlined the possibilities that exist for initiatives and cooperation among the churches and other groupings around the issue of resolving the problem of over indebtedness.
Mr. Eric LeCompte of Jubilee U.S.A. spoke of the role of the church and the origins and history of the global Jubilee movement.
Much of the time was spent in intense discussion on a public statement that would be issued by this conference. Since the problem of over indebtedness is common to most of the countries of the region the need for solidarity and mutual cooperation among churches and civil society organisations a decision was taken, again after much discussion, on the formation of “Jubilee Caribbean”, an organisation that would replace the existing Caribbean Debt Network.
Additional to the already existing Jubilee committee in Grenada, bishops and other representatives of churches from Jamaica, Dominica, Antigua & Barbuda, St.Vincent & the Grenadines, Trinidad &Tobago committed to gather their respective constituencies and discuss with them the setting up of national chapters of the regional network. A stock taking of this process is envisaged for end-January 2016 through a tele-conference. The merits and necessary efforts of setting-up a co-ordinating secretariat will be discussed then.
Remarks as prepared for delivery by Archbishop Roberto González Nieves “Solutions to Puerto Rico’s Financial Crisis: How Bipartisan Policies on Debt and Responsible Lending Can Protect the Most Vulnerable,” September 30, 2015
My People Are Suffering: Resolve the Puerto Rico Crisis Now.
I’m honored to share this venue with Reverend Heriberto Martinez the General Secretary of the Bible Society of Puerto Rico who coordinates the important ecumenical efforts on our island home. Shortly, Congressperson Raul Grijalva will join us. It was he that led the powerful report on Puerto Rico’s situation and how my people are being taken advantage of by predatory hedge funds.
I would like to thank Eric LeCompte and Jubilee USA Network for being in solidarity and joining Puerto Rico’s religious community as we strive for solutions for Puerto Rico’s financial crisis. I told Eric when he came to Puerto Rico, that his visit was providential. Jubilee USA is an incredible organization that has partnered with us and struggles alongside us to ensure we will achieve a debt plan that invests in Puerto Rico’s people. When Pope Francis was in the United States, he emphasized the work, focus and efforts of Jubilee USA. I join the Holy Father in that sentiment today.
Puerto Rico is embroiled in a deep debt and financial crisis. ……..
I come here today because my people are suffering and in Puerto Rico we face a growing humanitarian crisis. This crisis threatens nearly half of our people living in poverty. We are concerned about the debt, with the consequences defaulting on it and above all with the proposals that would reduce wages, layoffs of workers, reducing employee benefits, and a reduction in health services. Predatory hedge funds or so called “vulture funds,” are calling for further cuts to our schools, our healthcare and our minimum wage. The debt owed to hedge funds isn’t the Commonwealth’s only debt. Our pension funds are $40 billion underfunded and tens of thousands of ordinary people are counting on them. The Commonwealth should immediately prioritize making the payments to the pension plans that it is legally obligated to make but isn’t making.
- This type of austerity is unacceptable. Pope Francis’ statements on halting austerity and protecting the poor harken back to the very earliest of the Church’s teaching. In Pope Francis’s encyclical Laudato Si, he references that, “The foreign debt of poor countries has become a way of controlling them…” With even greater specificity, His Holiness offered a speech to the United Nations last Friday where he expressed, that countries and their people, “should not be subjected to oppressive lending systems which, far from promoting progress, subject people to mechanisms which generate greater poverty.” With the wisdom of Pope Francis, I and almost all of Puerto Rico’s religious leaders believe that our people should not suffer because of our country’s debt. Our island is $72 billion in debt and that represents $20,000 of debt for every man, woman and child of Puerto Rico. Not only has the debt already impacted our social services, too many of our people are fleeing to the United States in search of work. At the end of August, I joined almost all of our religious leaders on the island of Puerto Rico and we asked that the following principles guide how this financial crisis is resolved:
- 1) In any solution that is reached, there should be no more austerity policies affecting people and poor families and young people who are the most vulnerable.
- 2) Any solution must create an investment in the Puerto Rican people and seek to grow our economy.
- 3) We need enough debt relief to bring our total debt back to sustainable levels.
- 4) We encourage all solutions that enhance Puerto Rico’s laws on budget transparency.
- 5) We seek greater participation in resolving this crisis and working with the government on solutions that protect Puerto Rico’s people.
- 6) In addition to the participation of the religious sector, we call for a multisectorial participation in which our people are well represented. We call for a representation that also includes the poorest because they are always the most affected. I understand that some processes and options typically available to indebted governments are not available to ours. Because Puerto Rico is not a sovereign country, we can’t receive lowinterest loans or emergency financing from the International Monetary Fund. Because Puerto Rico is not a US state or city, we can’t access US bankruptcy laws. Nevertheless, Puerto Rico, in spite of its unique colonial status, has been a steadfast collaborator with the United States. I ask every member of Congress to support Puerto Rico Chapter 9 Uniformity Act HR 870/S. 1774. In the absence of Congress extending bankruptcy protection to Puerto Rico, we must call for greater involvement from the Federal Reserve to act and to arbitrate our debt according to our six principles to protect the common good. The Federal Reserve has the power to act and should act because the U.S. has a special responsibility to help Puerto Rico and not let it slip into economic chaos The Federal Reserve has the ability to restructure our debt in ways that limit austerity and ensure debt relief without harmful conditions. I specifically reference the Estrella paper that notes the Federal Reserve can act under powers in section 13 and 14. On behalf of my people, I call on the Federal Reserve to immediately intervene in a way that is in line with the principles outlined by the religious leaders in Puerto Rico and in line with the best humanitarian instincts of the American people. As we call for a debt restructuring that invests in Puerto Rico or a Jubilee for Puerto Rico’s people, we call for a Jubilee for all God’s people in every corner of the world. I echo Pope Francis’ explicit call for a global bankruptcy process. He was clear during his speech to the United Nations that here must be intervention to make the debt of all countries sustainable and to limit the kind of extreme behavior that we see certain hedge funds engaging in Puerto Rico. Policies that curb corruption, tax evasion, unequal trade policies and promote public budget transparency are vital for Puerto Rico and our world. We call for economies to serve people, not for people to serve economies. These shifts in global policy are vital for the vulnerable on whatever island or continent they dwell. Our brothers and sisters in the Caribbean are facing high debt burdens and poverty rates made worse by increasingly frequent storms. Nearly 50 of the world’s poorest countries face worrying levels of debt distress. We’ve even seen debt and austerity push a third of Greece’s population below the poverty line. Let me end my remarks by citing Pope Francis’s speech to Congress last week. “I know that you share my conviction that much more still needs to be done, and that in times of crisis and economic hardship a spirit of global solidarity must not be lost. At the same time I would encourage you to keep in mind all those people around us who are trapped in a cycle of poverty. They too need to be given hope. The fight against poverty and hunger must be fought constantly and on many fronts, especially in its causes.”
“Debt Relief in the Caribbean”
The Conference of Churches in Grenada held its third Debt Relief Conference on Tuesday and Wednesday April 22nd and 23rd, 2014, at the Upper Room of the Blessed Sacrament Church, Grand Anse.
The participants included representatives from St. Vincent and the Grenadines, Dominica and Jamaica and from International Jubilee organisations in the U.K., U.S.A. and Germany. The Commonwealth Secretariat was represented by economic advisor, Mr. Travis Mitchell. Local participants included representatives of trades unions, C.S.O s and churches.
The workshop was addressed by Permanent Secretary in the Ministry of Finance, Timothy Antoine .
The first conference in this series was held in May 2013. Following which a number of recommendations were made to the Government of Grenada which included a push for a reduction on the debt stock and a restructuring of the public debt.
The discussion since then s situation but also on the wider Caribbean region as most countries are also facing similar conditions with regards to their public debt.
Hon Oliver Joseph, Minister of Economic, Planning, Trade and Cooperatives, was presented with suggestions that can be adopted by Government as it embarks on various initiatives aimed at receiving debt relief and forgiveness from creditors
; The highlight of the conference was the launch of the Caribbean Debt Network – a regional body whose aim and objectives are:
1. To raise the awareness of the people of our region around the implications,
consequences and effects of the sovereign debt situations of our countries.
2. To work towards the establishment of an initiative that will provide a structure within
which our countries can resolve the problem of indebtedness.
3. To foster cooperation among the people, churches and civil society organisations s of
the region in working toward the resolution of the sovereign debt situation and the
achievement of sustainable development and fiscal responsibility at all levels.
4. To consider strategies around the social effects of sovereign debt on associated issues of
concern such as human trafficking, drug trafficking, climate change, HIV/Aids etc.
5. To work with governments and with our international partners on all aspects of debt.
6. To encourage the Governments of Grenada and Antigua & Barbuda to champion the
cause of having a special initiative for resolving the problem of the indebtedness of the
countries of the Caribbean and achieving a sustainable debt level.
The conferences received the support and funding of Adveniat, (an agency of the Conference of
German Catholic Bishops), the Government of Grenada, the Commonwealth Secretariat and the
United Nations Development Programme.
The Coordinator of the Caribbean Debt Network is Mr. Bernard Lauwyck of Dominica.
He can be contacted at firstname.lastname@example.org
A few highlights from IMF: Grenada. Ex-Post Assessment of Longer-Term Program Engagement. IMF Country Report No. 14/19 (January 2014)
Beside the normal Art.IV consultation, which the IMF does with all its member countries annually (at least in theory), the Fund does special evaluations of some programs, particularly those, which are somewhat more exceptional. In the present document the IMF staff assessed program success and failure of two longer term Fund programs in Grenada:
- A program under the Poverty Reduction and Growth Facility (PRGF), which guided government policies and provided Fund financing between 2006 and 2010.
- A program under the successor to the PRGF, the Extended Credit Facility, which ran from April 2010 until April 2013.
Both programs combined IMF financing of about US-$ 39m combined, with adjustment measure by the government of Grenada (GoG) under Fund guidance (pt.1)
The report provides very good and updated insights into the Grenadian economy in the middle of its worst debt crisis. Some highlights:
- High debt but still underestimated. External public debt stands at 108% at end-2012. However, this is still looks relatively benign because a major revision of the GDP at current prices by the IMF technical support unit in the Caribbean CARTAC, led to higher denominators, than previous methodology would have shown.
- Over-optimistic Fund projections. Figure 2 (p. 22) shows quite nicely, how IMF projections constantly missed Grenadian reality by assuming to positive outcomes from major indicators in a country in crisis. As new financings and economic policies regularly relied on the over-optimistic Fund projections this marks a clear co-responsibility of the key advisor of the GoG for the economic impasse, in which the country finds itself today.
- Too little debt relief too late. The track record of fiscal adjustment in Grenada has been poor: Not enough financing was available to allow for a sufficient fiscal stabilization without a major recessionary impact – in the absence of debt relief. Grenada clearly is a case in point for the “too little relief too late” syndrome, which the IMF had self-diagnosed early 2013 with regard to a broader range of its programs. (Box 6, p.23). In particular it shows that reducing current paxyment obligation in 2005 without a clear cut into principal was insufficient to prevent the country from sliding into recession. This is very much in line with the CCG’s insistence on debt reduction rather than only rescheduling during its workshop in St.George’s in October 2015.
- Shocks should better be taken into account. The document concludes a few guidelines for any future program, which “will need to take into account the volatility of growth and exposure to shocks, including downside scenarios and more realistic forecasts.” Which present programs have obviously failed to do.
- Debt restructuring is unavoidable. While the IMF tends to avoid mentioning the need for debt restructuring in its country analyses, wherever possible, it can not help but underlining it in the case of Grenada (pt.54). While this has already been largely a consensus among all stakeholders when the IMF said it, it is still useful for the GoG to avoid the notorious “debt restructuring hampers future access to capital markets” counterarguments from creditors.
- Public Investment needed. With the need for debt relief already largely uncontroversial end-2013, it is very useful that the IMF points to the need to create fiscal space to overcome bottleneck infrastructure and to create jobs, i.e. to move from restrictive fiscal policies in order to mobilize resources for debt service to one of investing public resources (p.36 and pt. 30)
- Fear for medium term debt sustainability. A huge Chinese infrastructure financing of US-$ 85-100m is still pending. The IMF discourages the government from taking it, by confirming its zero-ceiling for non-concessional borrowing (pts. 16, 24, 17), which has been obeyed by Grenada since 2006.
Jürgen Kaiser, erlassjahr.de, Feb. 4th 2014
 http://www.imf.org/external/pubs/cat/longres.aspx?sk=41282.0. References to the document are either to pages (p.) or to points (pt.)
 o/w about US-$ 28m still need to be repaid.