sir k dwight venner : economic reform – towards a programme for resuscitation of economic growth and development in the caribbean remarks by sir k dwight venner, governor of the eastern caribbean central bank, at the opening ceremony of the 35th annual caribbean monetary studies conference, basseterre. st kitts, 24 november 2003. * * * the caribbean region now finds itself at the crossroads of its economic history when it must make some fundamental choices in order to ensure the economic viability of its citizens, the improvement of their social prospects, and the maintenance of their political freedoms. all these issues fit squarely within the theme of this 35th annual conference of monetary studies, “ economic reform : towards a programme for resuscitation of economic growth and development in the caribbean ”. the international and domestic environments within which we now operate make this one of the most challenging epochs we have experienced and make the case for economic reform an even more urgent one. the increasing pace of globalisation and the constant spectre of poverty at the international level present formidable challenges and in some instances reduced options for most members of the international community, that is, the developing countries. the dominant countries of the international system have now posed or exposed the threat of terrorism as a counterpoint to the eradication of poverty. they may not express it in those terms, but the facts are that resources will be diverted from the fight on poverty to prosecute the fight against terrorism. the question which is being increasingly asked is “ are the circumstances of poverty not a pre - requisite for terrorism? ” the opposition to globalisation has certainly brought out a number of dissidents of different persuasions, including new style anarchists who are not opposed to violence. these issues speak to fundamental and systemic disjunctions at the international level, which will certainly have a limiting impact on our capacity to develop. the stark reality is that while we may have little or no control over these matters, other things being equal, we still must have strategies at our disposal to avoid, if possible, or to mitigate the impact on our countries and communities. this will require clarity of thought and rigorous intellectual analysis as well as a clear understanding of our longterm goals as opposed to short - term expediency. the policy makers of the region could possibly find themselves between a rock and a very hard place as they attempt to balance two sometimes conflicting demands. on the one hand there are the demands of the international community with their

the revenue and expenditure sides which should restore fiscal balance and confidence in the economy. • three countries, antigua and barbuda, dominica and grenada are in the process of carrying out comprehensive debt restructurings to reduce their debt to gdp ratios. • st kitts and nevis has taken the bold step to close the sugar industry in order to address the country's high debt to gdp ratio. • all countries are confronted by fiscal and debt imbalances due to the high per capita cost of government, small populations ; inelastic tax systems ; and the excessive demands placed on governments in liberal democratic systems with competitive party politics. another major issue is the environment, as these small states which are increasingly dependent on tourism, have to find the resources to deal with the problems of waste disposal, coastal erosion, and the constant threats of hurricane and volcanic activity. one major event that will bring all of these issues together and focus our attention in 2006 will be the cricket world cup due to be staged in 2007. in 2006 we will have to complete all of our infrastructural and commercial arrangements, many of which are very large to host this important event. we must, however, review our 2005 performance before we look forward to 2006 to determine the strategies we should pursue in order to ensure that we will have successful outcomes. the currency union experienced growth in 2005, estimated at 4 per cent which was approximately the same as in 2004. this growth was attributed to a sharp expansion in public and private sector construction activity, partly due to the preparations for the cricket world cup 2007. increased activity in wholesale and retail trade, transportation and communications, and the banking sector, also contributed to growth in 2005. the performance of tourism in 2005 was somewhat weaker than in 2004. stay over arrivals to the currency union as a whole declined marginally, mainly due to the lingering effects of hurricane ivan on grenada. however, most of the other countries recorded increases in stay - over arrivals. the number of cruise visitors declined, but this followed a record level of cruise passengers in 2004. output in the agricultural sector, which on average contributed 6. 4 per cent of gdp in 2004, declined significantly in 2005 due to the weak performance of the traditional export crops. production of bananas, sugar, nutmegs, and cocoa fell sharply. the rate of inflation in the currency union for 2005 has been provisionally estimated at 3. 5 per cent. this is explained by a surge in the international price of oil and other