countries are projected to have heightened debt vulnerabilities, averaging in the range of 50 to 90 percent of gdp, in 2013. these are the bahamas, belize, dominica, guyana, st. lucia and st. vincent and the grenadines. ladies and gentlemen, the magnitude of the fiscal adjustment required to stabilize and eventually reduce the caribbean ’ s public debt overhang is neither socially nor politically feasible. only two small island developing states in the caribbean – guyana and haiti – have been able to access comprehensive debt relief under the enhanced heavily indebted poor country ( hipc ) initiative and under the multilateral debt relief initiative ( mdri ). other small vulnerable caribbean economies are considered not poor enough and / or not severely indebted enough to benefit from similar international debt relief measures. in the meantime, a few caribbean small island developing states have engaged in debt restructuring operations, sometimes more than once, but debt problems persist. the sombre picture, ladies and gentlemen, is one of wide external current account deficits, heavy public debt and slowing capital flows which are placing undue pressure on the region ’ s international reserves and predominantly fixed exchange rate regimes ( inclusive of a currency board arrangement in the eastern caribbean ). caribbean countries are unwilling to devalue their currencies to support their weaker external positions. barbados, in particular, remains vehemently opposed to devaluation, which it considers ill - conceived and unsuccessful at correcting the low growth, high debt dilemma facing small, vulnerable caribbean economies. an appropriate balance is yet to be struck between adjustment and financing. since september 2008, nine small island developing states in the caribbean have turned to the imf for increased financial support under various lending facilities. these are antigua and barbuda, belize, dominica, grenada, haiti, jamaica, st. kitts / nevis, st. lucia and st. vincent and the grenadines. yet, it is arguable whether the current lending facilities of the imf, the world bank and other international financial institutions are sufficient enough to help mitigate the impact of large, unforeseen external shocks on caribbean and other small vulnerable economies. over the past decade, the international community has championed several initiatives to help mobilize more resources for development or to make them more effective. well known examples include the international finance facility for immunization, debt conversions, emissions trading, a financial transactions tax and use of the imf ’ s special drawing rights

will help to influence african, caribbean and pacific governments in their advocacy for innovative sources of development finance to be a front - burner issue on the international economic agenda. ladies and gentlemen, it is no secret that small vulnerable economies in the caribbean have grappled with external shocks of varying magnitudes and duration over the past two decades. these shocks include a compression of aid flows, dismantling of preferential trade arrangements for sugar and bananas, interventions related to anti - money laundering and combating the financing of terrorism. more recently, the caribbean has been gradually recovering from the shock of the global financial crisis, which originated in the united states and spread to europe, the region ’ s two closest trading and investment partners. the untold story, however, is that the combined influence of these multiple shocks has led to a dramatic and fundamental shift in the composition of external financing flows to the caribbean. bis central bankers ’ speeches in my respectful view, the most significant change in the regional pattern of external resource flows stemmed from the sharp compression in official development assistance ( oda ). flows of oda to many caribbean countries began falling in the 1990s, as donors redirected their aid priorities to the newly emerging commonwealth of independent states and the least developed countries. this is certainly ironic because the eighth mdg recognizes that developing countries require more generous development aid to have the best chances of reducing poverty and accelerating development within the stipulated 15 year timeframe. faced with declining aid resources, many caribbean governments resorted to more expensive commercial borrowing to bridge their funding gaps. this, combined with the growing inability of regional governments to generate high enough primary fiscal surpluses for debt servicing, contributed to a large public debt overhang. gross public debt in the caribbean climbed rapidly from 65 percent of gdp in 1998 to a peak of almost 100 percent of gdp in 2002, before falling to a still elevated 80 percent of gdp in 2012. the accumulation of public debt was even faster in the eastern caribbean, moving from just over 60 percent of gdp in 1998 to a high of almost 120 percent of gdp in 2004, before falling to 95 percent of gdp in 2012. generally, a public debt ratio of over 90 percent of gdp is considered exceptionally high. by this measure, four countries in the caribbean are projected to hold exceptionally high public debt in 2013 : jamaica ( 140 percent ), st. kitts & nevis ( 139 percent ), grenada ( 109 percent ), and antigua & barbuda ( 93 percent ). another six