Greenidge: Caribbean builds resilience against global shocks

The global environment presents intensifying challenges for small, open economies, including trade fragmentation, elevated borrowing costs, and increased geopolitical tensions.

These old vulnerabilities now interact, creating compound problems like debt stress colliding with climate risk, and tourism dependence with pandemics.

Dr Greenidge distinguished between structural vulnerability, inherent to small states (e.g., narrow production bases, climate exposure), and policy-induced resilience, which reflects choices in governance, fiscal policy, and financial regulation.

Barbados learned this distinction the hard way in 2018, facing public debt at almost 179 percent of GDP and critically low international reserves of US$220 million.

The government responded with the homegrown Barbados Economic Recovery and Transformation (BERT) Plan, focusing on restoring credibility and restructuring debt.

The BERT plan successfully moved Barbados' primary balance from a 3.5 percent deficit to a 6 percent surplus within two years, while protecting social spending.

This fiscal discipline created crucial policy space, allowing the country to respond to severe shocks like COVID-19 and Hurricane Elsa without derailing its recovery.

Subsequently, BERT 2022 shifted focus to transformation, embedding climate considerations across the economic framework.

This included using the IMF's Resilience and Sustainability Facility for climate financing and incorporating climate risk into budget analysis.

Barbados also innovated with natural disaster and pandemic clauses in new bonds and executed debt-for-nature and debt-for-climate-resilience swaps, demonstrating new ways to finance adaptation without increasing debt.