A Discourse on Debt and Economic Growth in the Caribbean Community by Professor Compton Bourne, PhD, O.E.

CONTEMPORARY DEBT SITUATION CARIBBEAN COUNTRIES ARE HIGHLY INDEBTED Debt as % of GDP Country Total Public Debt as % GDPExternal Debt as % GDP Antigua & Barbuda Bahamas Barbados Belize Dominica Grenada Guyana Jamaica St. Kitts & Nevis St. Lucia St. Vincent & the Grenadines Trinidad & Tobago

Contribution of Debt to Economic Growth y = af(k) s n+w=k

Debt Sustainability Old Version Focuses on Debt Service Relative to Fiscal Revenues and Exports of Good and Services. Data Indicative of Problem of Diminution of Debt Capacity. Modern Version Focuses on Primary Surplus. The Easterly Formulation – ∞ ∫ e ‾ rt (T t + A t - G t ) d t ≥ D o 0 where T is tax revenues, A is Net debt inflows, G is government expenditures, D is public debt stock, and r is the discount rate

Debt Sustainability p/(r-g) = D o /Y o T t + A t - G t ) /Y t = (r-g) D t / Y t Interest Rates Rose and Economic Growth Rates Decreased in the Caribbean causing the Required Primary Surplus to Increase

Debt Sustainability Annual Growth Rate of Real GDP % Country Year Antigua and Barbuda The Bahamas Barbados Belize Dominica Grenada Guyana Jamaica St. Kitts and Nevis St. Lucia St. Vincent and the Grenadines Trinidad and Tobago2.07.1

Towards a Conclusion THE END