In 2019, the world experienced its lowest crude death rate ever – at 7.525 deaths per 1,000 persons, according to the World Bank. This figure is estimated to have increased for the first time this century to at least 7.6 in 2020.
While 1,813,188 COVID-19 deaths were reported in 2020, recent WHO estimates suggest an excess mortality of at least 3 million persons. Globally, as of 11:37am CEST, 19 July 2021, there have been 189,921,964 confirmed cases of COVID-19, including 4,088,281 deaths (reported to the World Health Organization).
As if the pandemic itself was not enough to be worried about from a survival standpoint, we have seen vibrant manifestations of various perennial ills, such as underreported death and infection rates globally, vaccine inequality, undisclosed vaccine sources and uses, unclear and ever-changing reported vaccine efficacy rates and risks, and vaccine passport discrimination, for example.
These and other pandemic-related mishaps only add to the simmering sense of confusion and chaos, causing many a (buried) seed of suspicion to spring green shoots of mistrust, and spread its roots. The irony is that in a world that has grown to almost expect fake news, truth, transparency, and their offspring – trust – are probably at once, more priceless but more elusive than ever before.
And then there is the perennial issue of money. There is probably no country on earth that hasn’t had to find the fiscal space somehow to respond to this crisis, and most have resorted to some combination of borrowing, printing, and drawing down on reserves / assets.
Caribbean countries have received various forms of funding and support from bilateral and multilateral sources, all have drawn down on available foreign exchange reserves, and some have even raised commercial debt. Suriname is the only Caribbean country thus far to have declared a balance of payments crisis during the pandemic, but this was more a timing coincidence, as their challenges were based on pre-existing conditions.
Almost all Caribbean countries have seen their organic/non-borrowed level foreign reserves decline, as the main industry in the region – tourism – has been one of the (if not THE) most severely pandemic-affected industries.
But what does this actually mean? Well, almost every country in the Caribbean has to hold sufficient foreign exchange reserves (3-month minimum benchmark) to defend its own domestic currency’s value against the USD. If these reserves are depleted, and the country does not have sufficient reserves to pay for its imports and foreign debt servicing, the Government declares a balance of payments/debt crisis, and usually would seek IMF assistance.
Without tourism-related income, the inflows of foreign exchange regionally have weakened, and all Caribbean (tourism-dependent) countries are therefore more vulnerable to balance of payments crises. But most countries regionally have borrowed in USD over the past 18 month and have been given some type of financial support from external sources – whether in the form of loans or grants or project financing.
These sources of USD inflows are critical, given the near-dropoff in tourism-related USD inflows, and pandemic-related inflows (borrowed or otherwise) are among the highest USD inflows in many countries during this pandemic. Accounting for these inflows, and the related outflows of USD, is paramount therefore.
Thus far, the quantum of (declared) funds / assistance given / loaned to various Caribbean countries to address the socio-economic effects of the pandemic, from domestic, bilateral and multilateral sources, are as follows:
|Antigua and Barbuda||$61,220,902|
|St. Kitts and Nevis||$3,280,083|
|St. Vincent and the Grenadines||$21,500,000|
|Trinidad and Tobago||$321,063,692|
With these and other funds, these countries conducted a variety of pandemic-related response spending, such as unemployment relief grants and other direct social welfare spending, purchase and distribution of vaccines, SME and hospitality sector support, and various tax relief measures, for example.
How have these funds been deployed towards vaccination efforts? Haiti is the only Caribbean country and only one of 5 worldwide, to not have a vaccination campaign underway, and only received its first shipment of vaccines in mid-July.
It is not surprising that the top 5 vaccinated jurisdictions in the Caribbean are non-sovereign territories (which we are not tracking at this time for pandemic-related financial support), as these are generally the first to receive assistance from Europe.
And the largest source markets for tourism – US, UK, Europe, and Canada – all have vaccination rates in excess of the Caribbean and other developing nations, highlighting vast vaccine inequality and its uneven effect on the region.
In accounting for how their Covid-related funding is spent, we are left with more questions than answers, and very little information being published on actual spending.
The column labelled “Difference” shows the amounts unaccounted for, which ranges from the full amount received in 8/14 countries (i.e., the authorities have not publicly disclosed the specific initiatives they are spending on and how much is being spent), and funds being partially accounted for in 5/14 countries in the Caribbean.
|Country||Inflows (USD)||Outflows (USD)||Difference (USD)|
|Antigua and Barbuda||$61,220,902||$61,220,902|
|St. Kitts and Nevis||$3,280,083||$3,280,083|
|St. Vincent and the Grenadines||$21,500,000||$21,500,000|
|Trinidad and Tobago||$321,063,692||$441,000,000||-$119,936,308|
Trinidad and Tobago is the only country where the Government has outlined spending that exceeds the (pandemic-related, disclosed) amount being received, by about US$120 million. This could partially reflect the funds withdrawn from the country’s sovereign wealth fund, the Heritage and Stabilization Fund (HSF), which amounts to US$1.393 billion during the pandemic thus far. Interestingly, these withdrawals from the HSF have been decidedly front-loaded, with US$600 million being withdrawn in Q2 2020, US$300 million in Q3 2020, US$199 million in Q4 2020, and US$294 million in Q1 2021.
The Minister of Finance disclosed that for fiscal year 2019/2020, he “withdrew close to US$80 million under the normal conditions of shortfalls in petroleum revenue and US$900 million under the new provisions with respect to dangerous infectious disease, the COVID-19 provisions. In terms of fiscal 2020/2021, we’ve withdrawn US$292 million under the normal system arrangements the system was set up for and US$300 million for pandemic support.”
The Government of Trinidad and Tobago also raised a net US$250 million on the external capital market. In fact, according to the Minister of Finance in June 2021, “a total of about US$1.5 billion in exceptional financing (was) raised for spending related to the pandemic.” The Minister of Finance also disclosed that he is likely to spend in total about US$15.7 million on the acquisition of vaccines for 85% of the population, or approximately 1.2 million persons.
These numbers reveal that T&T has raised (and plans to spend) more than any other country in the Caribbean, including the Dominican Republic, which has a population over 10 million persons. We congratulate T&T’s Minister of Finance for his level of disclosure thus far, and we look forward to him fully accounting for the remaining US$1.48 billion (US$1.5 billion less US$15.7 million in vaccines) in pandemic-related spending – the highest in the Caribbean.
To mitigate the effects of COVID-19 on the economy, the Government initiated a comprehensive stimulus package which needed funding – some of which came from the HSF.
On March 26, 2020, an amendment to the HSF Act was passed in Parliament to allow for withdrawals of up to US$1.5 billion during the financial year, in the event of a health crisis, a natural disaster or a precipitous drop in budgeted revenue.
In 2020, the country withdrew approximately US$1.2 billion from the HSF. That sum covers the period January 1, 2020 to December 31, 2020 and the money was drawn down in the fiscal years 2020 and 2021.
In fiscal 2020, US$900 million was withdrawn from the Fund and so far for fiscal 2021, US$300 million has been withdrawn for budget support.
It is imperative (and in some countries, standard practice) that Governments account for the levels and type of spending they engage in generally, but more importantly, as it relates to the pandemic, as this is possibly the most powerful natural experiment that we would experience in our lifetime, as to:
- How tourism really affects our economies, as to employment, foreign reserves, growth, fiscal revenue,
- How well our government handles a crisis from a financial, economic, and social standpoint, and therefore, how deserving they are of the electorate’s support,
- How well our social support mechanisms function, among others.
We look forward to seeing a higher level of transparency around pandemic-related funds received and perhaps more importantly, pandemic-related spending across the region. We appeal to all Governments across the region to account fully for all pandemic-related receipts and expenditures, as we will be monitoring their reporting very carefully, and commenting publicly on a regular basis.
We are living through the natural separation of the goats from the sheep, as it relates to the quality of our nations’ Governance. This is when true leaders are revealed.
The analysis and opinion in this piece was based on data in the public domain obtained at 14th May, 2021.