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CAF-development bank of Latin America and the Caribbean announced the incorporation of Bahamas, Dominica and Grenada, doubling its number of Caribbean members. The decision, made during the recent board meeting in March 2024, increases the number of member countries to a total of six sovereign states. Thus, CAF is established as the multilateral bank with the greatest presence in the Caribbean Community (Caricom), which includes a total of 15 member countries.
With an asset base of more than $53 billion and a project portfolio that exceeds $34 billion, the entity is one of the main sources of multilateral financing in the region. Since its founding in 1970, the financial institution has expanded its shareholder base to include 21 countries and 13 private banks.
Although CAF has been present in the Caribbean since the incorporation of Trinidad and Tobago in 1994, the inclusion of Bahamas, Dominica and Grenada comes after a period of intense activity by the bank in Caricom. In response to the climate crisis, the consequences of which impact the Caribbean disproportionately, and the Covid-19 pandemic, CAF began to expand its activities in the region to promote the economic reactivation of the region.
In 2021, CAF approved a capitalization of $7 billion, the largest in its history, in order to expand its support to its member countries. In November of the following year, the institution established a regional office for the Caribbean under Stacy Richards-Kennedy. Later, she integrated the archipelago into her name and logo. And, in 2023, the board approved a new facility. That is, a financial mechanism designed to facilitate access to economic resources aimed at promoting economic and social development in Caricom countries. This grant financing program was made available to English-speaking Caribbean countries that were not members of the bank; a unique phenomenon in the region.
As Richards-Kennedy points out, the events of the last three years have allowed for closer relations between CAF and the Caribbean, channeling more development and assistance resources to the region. In particular, the opening of the regional office “provided a platform to have more direct communications with these countries and, for them, it was a time to have connections with a bank that offered new financing options.”
This new space for dialogue, explains the manager, made it possible to find common points. “Once we have this shared vision, there are certain steps that countries have to take. First you have to present a case to the board and have a discussion and presentation with the CAF technical committee. “Then, we request a stock provision for a new country.” Once the request is presented to the board, the country begins to sign the agreements that specify its capital contribution to CAF.
In the case of Bahamas, Dominica and Grenada, the board approved the provision of shares for the new countries during its meeting in the Dominican Republic at the beginning of March 2024. This first step allowed the three islands to formalize their interest in joining the bank.
The provision of these actions opens new avenues of access to development financing for member countries. Depending on the operation, the project and the situation of the country, it can access loans, partial guarantees, structured financing, guarantees and guarantees. Beyond financial instruments, CAF offers technical assistance and knowledge services to its shareholder countries. This supportive ecosystem, explains Richards-Kennedy, allows the country to carry out a range of actions: from preparing studies to collecting development data for new shareholder members. It also allows the bank to “build an alliance with the country and a deeper understanding of its needs,” which facilitates “the process of strengthening relationships, establishing alliances, and deepening knowledge of the country and the bank.”
Throughout the Spring Meetings of the World Bank Group and the International Monetary Fund, which took place from April 11 to 18 in Washington DC, CAF advanced in the process of incorporating these three new shareholder countries. Subsequently, Michael Halkitis, Minister of Economic Affairs of the Commonwealth of the Bahamas, and Dennis Cornwall, Minister of Finance of Grenada, expressed their excitement regarding the signing of the agreements. Also present was Mia Mottley, Prime Minister and Minister of Finance of Barbados. In her statements to CAF, after the meeting in Washington, the head of state extended her congratulations regarding the signing of the agreements: “Trinidad, Barbados, Jamaica were already members, and now we are seeing more Eastern Caribbean countries join, because CAF has had an approach as a development bank that has really paid attention to the countries rather than simply standing above the conditions, which very often make the development and lending process very complex.”
This may not be the last addition of Caricom states to the CAF membership list. During the IV International Conference on Small Island Developing States (SIDS4), which took place in Antigua and Barbuda from May 27 to 30, the host country expressed its desire to become a shareholder in the bank. Within the framework of the conference, the Prime Minister of Antigua and Barbuda, Gaston Browne, signed a declaration of intent. This is the first step towards membership in CAF.
The Antillean country is, like the rest of the countries in the region, disproportionately vulnerable to the effects of climate change. As revealed by a study by the United Nations Population Fund (UNPF) presented at SIDS4, the former British colony is exposed to hurricanes and tropical storms that, exacerbated by the global change in temperatures, endanger the lives of communities. coastal areas of Caricom. Furthermore, with an estimated sea level rise of between 0.4 and 0.5 meters by the end of the century, UNFPA warns that Caribbean states are exposed to coastal erosion, disruption of maritime ecosystems, increased storm surges and displacement of their populations.
Given that tourism constitutes 80% of Antigua and Barbuda’s GDP, these phenomena could have serious implications for the island’s economic development. In this scenario, a possible incorporation of Antigua and Barbuda would open the doors to lines of credit and financial instruments that, in turn, would allow the island nation to create resilience programs that increase the quality of life of its inhabitants.
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