Caribbean countries urged to be more prudent with CBI spending
Nigel Chalk, acting director of the International Monetary Fund’s (IMF) Western Hemisphere Department, said Thursday that while the Citizenship by Investment Programme (CBI) has been beneficial to Caribbean countries, the revenue generated by the program “is very volatile.”
Several Caribbean countries provide citizenship to foreign investors in exchange for significant contributions to the socioeconomic development of these countries under the CBI program.
Chalk told reporters at a news conference on the Latin American and Caribbean economic outlook that the CBI has been a very important element of the Caribbean and that the Washington-based financial organization “has been genuinely supportive” of the project.
“They generate significant revenues for the country, and those revenues have the potential to be deployed in a variety of areas, including to some extent social spending, but also the region is very prone to hurricanes, and there is a lot of need to make the infrastructure more resilient to adapt to climate change…
“I believe the CBI program is important in these countries overall.” I’d like to highlight two points.
“First and foremost, 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 basically saved and 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 a stop-go spending linked to depending on how much CBI revenue you get in a year.”
Chalk believes it is also important to maintain and improve schemes such as the CBI “given their reliance on recognition by some of the larger economies,” and he applauded the Eastern Caribbean Currency Union’s (ECCU) move to improve “the integrity of these schemes in conjunction with some of the larger economies.”
In reference to the Caribbean tourism sector, Chalk stated that the IMF anticipates the US economy will grow “pretty strongly” and that one feature of the US economy is the move from goods consumption to services consumption.
“So, even though their overall economy is weakening, the move from goods to services could benefit the Caribbean, as well as tourism-dependent countries, because Americans are traveling more and investing more in leisure activities….
“I believe we have seen across the Caribbean that it has proven to be quite a significant boost to the economies.” We don’t see a recession, and we believe that the potential flow of tourists will be sustained, but I believe it is important for the countries in the region to consider what to do if it slows or if the US slows down.”
He also stated that regional countries should have a strategy in place to deal with the likelihood of increased interest rates in the United States in order to reduce inflation.