Regional Report: In the Caribbean, Energy Matters!
In this issue, we analyze the existing energy structure in theCaribbean countries and discuss possible alternatives toresolve the high cost of energy and import dependency. Weconsider whether a range of renewable energy technologiesare economically and commercially viable and how theycould be implemented.At present, the IDB’s Caribbean Country Department andEnergy Division are working together with
to develop country-specific and regionwidecommercially viable solutions to the region’s energyproblems.
Fiscal results for 2013 could outperform expectations in Guyana and Trinidad and Tobago. In contrast, high fiscal deficits have forced the governments of The Bahamas, Barbados, and Jamaica to adopt further expenditure cuts and new tax regimes. In Suriname, authorities remain committed to reduce the fiscal deficit, despite falling gold prices.
Summary of Recent Developments by Country
In The Bahamas,
results for the first 11 months of 2012/13 fiscal yearrevealed a widening in the government's deficit by almost 50 percentbecause of lower tax revenues. The government plans to reverse thedownward trend of revenues by implementing a value- added tax inJuly 2014.
the government presented the Barbados
Growth and Development Strategy
2013–2020, which focuses not only on fiscalconsolidation measures but also on growth initiatives. The governmentis targeting a fiscal deficit of around 3 percent of GDP by the end of 2014/15 and an acceleration of growth thereafter, to 4 percent by2020.
authorities reduced the expected real growth in 2013 to 4.8percent from 5.3 percent after lower-than-expected output in the sugarindustry.
Workers' remittances decreased during the first half of theyear and are projected to be mostly flat this year.
economy contracted 0.4 percent in the second quarterof 2013. The authorities expect a resurgence of growth in the thirdquarter, which would result in a weak 0.8 percent rise during this fiscalyear. S&P upgraded Jamaica's long-term rating to B– from CCC+ afterrecent progress in stabilizing the economy.
despite an increase in capital expenditures and fallinggold prices during the first half of the year, the government continuesto show its commitment to achieve a fiscal deficit of 3 percent in 2013,compared with 4.1 percent considered in the 2013 Budget. The 2012Census results were published in September.In
Trinidad and Tobago,
Cabinet presented the 2013/14 budget,which projects a fiscal deficit of 3.6 percent of GDP, down from the 4.6percent of GDP projection in the 2012/13 budget but somewhat aboverecent outcomes. Among other measures, the budget incorporatesmore tax incentives for new oil exploration and eliminates the fuelsubsidy to Caribbean Airlines Ltd for international flights.In the
Eastern Caribbean Countries,
the economies display signs of recession in the first quarter of 2013. According to the EasternCaribbean Central Bank, real growth could reach 1.5 percent in 2013,accelerating to 2.2 percent in 2014.
In This Issue, We Focus on Energy Policies and Challengesin the Caribbean
With the exception of Trinidad and Tobago and to a lesserextent Suriname, Caribbean countries depend on importedfossil fuels.
Expensive energy imports contribute importantly tothe large current account deficits. The private sector hasindicated that the high cost of electricity and inadequateinfrastructure is one of the main constraints to sustainablegrowth.In this issue, we discuss the
main energy challenge
s in TheBahamas, Barbados, Guyana, Jamaica, and Trinidad and Tobago.Some of the current projects aimed at reducing oil energydependency include the
reform of the electricity sector
in TheBahamas, the increase of
solar energy infrastructure
inBarbados, and the installation of
inJamaica's public sector buildings. In Guyana, energy policieshave been directed to increase
investment in low-carboninfrastructure.
As a net energy exporter, Trinidad and Tobagoenergy challenges are related to adjusting to the leveling-off of oil and gas
have a large fiscal costand reduce the incentives to implement renewable energyalternatives. In addition, we analyze the
debt and fiscalsustainability in Suriname under different gold pricesscenarios
. The results show that by effectively managing itsresources, Suriname can improve its fiscal position andmitigate the effect of gold prices.
Volume 2, Issue 4October 2013
Real GrowthRateAnnualInflation (%,end of period)GeneralGovernmentPrimary Balance(% of GDP)GeneralGovernmentOverall Balance(% of GDP)CurrentAccountBalance(% of GDP)GeneralGovernmentDebt(% of GDP)
1) High-debt countries
2) Medium-debt countries
The Bahamas1.91.0-5.4-7.6-14.956.1Trinidad & Tobago1.64.00.4-1.48.633.4
3) Low-debt or FSO countries
For Guyana, most debt is on concessional terms. FSO = Fund for Special Operations.
World Economic Outlook, October 2013.
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