Regional leaders face hurdles in push for economic union

Published: Monday July 21, 2008

Many rivers to cross....

But I can't seem to find my way over

THE WORDS of the Jimmy Cliff's song aptly describe the problems facing regional leaders as they push to meet the 2015 schedule for an economic union.

This should involve the harmonisation of monetary and fiscal policies in the 12 regional states which have signed on to the Caribbean Single Market and Economy (CSME).

But, in a region where political parties in individual countries often cannot agree on monetary and fiscal policies, some are finding it difficult to see how 12 states with 11 million people will agree on issues such as fiscal deficit, debt levels and interest rates.

Fundamental decisions

These are issues the CSME secretariat accepts will be difficult to address, but the body remains upbeat that, once there is the political will, the single economy will be in place on schedule.

"The road to monetary integration is going to be difficult for the simple reason that it will require what I would describe as fundamental decisions and, more importantly, the creation of a monetary integration treaty," said programme manager of the CSME secretariat, Ivor Carryl.

But Carryl is confident there is enough time to have this done to meet the 2015 deadline. He is supported by macro economist at the CSME Secretariat Lennox Forte.

"Apart from the obvious political will that is required, there has been significant work that has already taken place," Forte said.

Established bodies

According to Forte, the Organisation of Eastern Caribbean States (OECS) provides an example that a single economy is a workable proposition. He said the region has already established bodies to ensure that the process works.

"There is the Council of Finance and Planning which is the body responsible for fiscal issues and the Committee of Central Bank Governors which is responsible for monetary policies, so the facilities for collaboration and coordination of policies already exist," Forte said.

But Forte accepts that there has to be an increase in inter-regional trade to provide the market stimulus for an economic union which could result in a single currency replacing the currencies used across the Caribbean. That proposal for a single currency is one of the major rivers that will have to be crossed in the rush towards a single economy.

This could mean that the Jamaican dollar and other individual currencies would be abandoned. For Forte, this would be the best method. However, he is not prepared to allow that to be a sticking point.

"We can have a situation where we have multiple currencies; it has happened before in the history of the West Indies. The key to it is that the exchange rate between the currencies must be transparent," Forte argued.

He rejected claims that the single economy cannot work without a political union, pointing to the European Union.

According to Forte there could be the establishment of a group of commissioners to monitor the single economy.


Source:
Arthur Hall
Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20080721/business/business2.html
arthur.hall@gleanerjm.com