By Kurt Campbell
Regional Economic Adviser at the Inter-American Development Bank (IDB), David Rosenblatt is advising Guyana and other regional economies that it is not a disservice to the country should it look to borrow money to invest, particularly in infrastructural projects during the ongoing COVID-19 pandemic.
“It’s on to borrow right now. Lots of countries around the world are doing it and that is what everyone is doing. You can’t do it forever, but markets around the world understand and certainly, the multi-lateral agencies are deploying many resources in favourable terms,” he told the News Room from his Washington, DC office on Wednesday.
His comments come on the heels of a new report by the IDB, which urges Guyana and other Caribbean economies to invest in infrastructure as a means of securing economic growth once COVID-19 subsides.
“At the end of the day, the ‘B’ in IDB stands for Bank and again, I would like to emphasise that the terms offered are much more favourable than these countries can get to market,” he added.
Rosenblatt acknowledged that countries across the world are looking for creative ways to get out of the crisis brought on by COVID-19 and has endorsed the report, “A Pandemic Surge and Evolving Policy Responses.”
Just as the report has done, he acknowledged that fiscal space is a constraint. He supported the contention that as a nascent economic recovery emerges, additional resources should be channelled to high-productivity infrastructure products to further, stimulate growth.
“This type of crisis puts a premium on quality and efficiency on public spending…countries can eliminate programs that do not help the recovery and channel resources to what will help the economy.
“Borrowed resources are ok to use for high return, high productivity, and efficiently designed infrastructure projects,” he added.
The economic adviser said the IDB understands its role in these unprecedented times and continues to share information and ideas in creative ways as a means to assist in the recovery.
Notwithstanding this, Rosenblatt believes that Guyana is in a privileged position, being the only country in the Caribbean and Latin America experiencing positive economic growth in 2020.
He pointed to the resources constraint that other countries face and said that while it is not the case for Guyana, the real challenge is managing the boom that’s currently occurring.
“The big picture issue is converting the hydrocarbon wealth into human, physical and financial capital… to save wealth for future generations,” he said.
The IDB report expressed the belief that once the investment is made in infrastructure, over time, this drives higher levels of private investment, incomes, and consumption.
“Caribbean countries are particularly well placed to benefit from increased or accelerated public investment, in part because of the region’s significant needs. In this context, the past decade has seen declines in public investment levels across Caribbean economies,” the report noted.
Beginning in 2014, and coinciding with large declines in global commodity prices, levels of public investment in commodity exporters Guyana, Suriname, and Trinidad and Tobago saw single year contractions of over -40 per cent, -50 per cent, and -75 per cent, respectively.
Rosenblatt believes that the first task for regional countries is to stop the coronavirus from spreading.
“Countries will need to use sophisticated tools that look at closure or reopening of their economies with decisions based on susceptible, infected, and recovered models, both at source and destination countries.”