Photo by iAko Randrianarivelo
Tourism-dependent countries in the Caribbean have been set back by as much as 20 years as a result of the ongoing coronavirus pandemic, according to Barbados’ Prime Minister, Mia Mottley.
Speaking at an IMF forum on Natural Disasters and Climate Change Mottley called for recognition of the plight of tourism-dependent nations and for such vulnerabilities to be written into agreements between small island developing states and lenders.
“The only countries that have been worse hit than us last year are war-torn countries. Our declines have been double-digit in most instances in the Eastern Caribbean; they hover around 18/19%. So, this thing has reversed us at least by a decade in nominal terms, but more like two decades in terms of real losses” the Prime Minister said. IMF Managing Director, Kristalina Georgieva, also acknowledged that tourism-dependent countries have been among the hardest hit by the pandemic.
In her remarks, Prime Minister Mottley pushed back against the notion that the G7 pledge to provide 1bn vaccines to lower income countries by the year’s end could rescue tourism and travel-dependent countries. She noted that countries “have to open back up their economies because they face either economic implosion if they keep their borders closed, or literally the virus running rampant and causing too many people to die on our shores.” In a reflection of this, Trinidad and Tobago’s Prime Minister, Keith Rowley, recently announced that his country’s borders which have remained closed since the start of the pandemic will reopen in July.
Referring to the limited success of the G20-led Debt Service Suspension Initiative, Mottley said that the presence of a pandemic-specific debt relief clause could have limited Barbados’ debt ratio which had fallen from 177% to 118% pre-Covid but has now increased to 152%, not primarily because of increased borrowing, but the contraction of the economy.
Confirming international concern about growing indebtedness because of the pandemic, UN Secretary-General António Guterres has called for debt relief extension for Caribbean and other middle-income countries. Speaking at a UN General Assembly meeting, Guterres said that the more than 100 middle-income countries which account for over half of the UN’s 193 member-states should have their debts suspended into 2022 to cope with the social and economic impact of the virus. “In small island states, for example, the collapse of tourism has greatly hindered their capacity to repay debts,” he said. “And while the global response to the debt crisis is rightly attempting to support low-income countries, middle-income countries must not be left behind.”
Guterres warned that “even if these countries manage to avoid default, they will see long-lasting limitations on critical government spending on a variety of development and climate objectives in the years to come.” “This is the moment to tackle long-standing weaknesses in the international debt architecture, from lack of agreed principles to restructurings that provide too little relief, too late” he declared.
While some of countries are already experiencing an improvement in tourism as the global vaccine rollout continues, the short-term future remains unclear. Arrival statistics from Tourism Analytics show that while countries like The Bahamas, Aruba, and Antigua and Barbuda have been on the mend in recent months, they are nowhere close to 2019 levels.
Confirming this, a new study by World Travel and Tourism Council (WTTC) and Oxford Economics has found that travel and tourism sector’s contribution to the Caribbean’s GDP fell by 58% (US$33.9bn) in 2020, moving from US$58.4bn (14.1%) in 2019, to $24.5bn (6.4%). They estimate that over 680,000 jobs (24.7%) were lost across the region’s travel and tourism sector which fell from nearly 2.76mn in 2019, to 2.08mn in 2020.
There remains uncertainty about the science surrounding the different vaccines and their effectiveness against new and emerging variants of the virus. These factors, as well as their general availability to the region, puts the idea of a tourism-led economic recovery in a precarious position. The implication is that small states globally will require all the help that international institutions and more developed nations can muster, if they are to emerge from the pandemic without a lost decade, or two.
This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.