Views from the Field No. 6 – The Caribbean
Posted by Eileen Browne
RA: What makes the technical assistance CARTAC offers different?
EZB: Two things: the people, culture and institutions of the Caribbean region and CARTAC’s focus on member-driven TA efforts.
The Caribbean is a constellation of small islands and coastal nations and CARTAC serves 20 English-speaking ones, many of which celebrated their 50th anniversary of independence this year. Jamaica is the largest island with 3 million inhabitants; Trinidad and Tobago is the second in size with 1.2 million; Barbados is the third with 0.25 million and the rest of the nations are smaller. Eight of them have formed a currency union. The Caribbean enjoys middle-income status yet shares many institutional deficits with much poorer countries.
The natural beauty of this region is breath taking. Plentiful fresh fish and fruit make healthy eating a joy and form the basis for the many, varied cuisines of the islands. Tourism is a major element of the economies, especially with the transformation of the role of sugar that forged the melting pot of immigrants who created such a richly multi-cultural global microcosm. And extractive industries exist in a few places - with all their special lures and dangers - and are expected to become even more important soon.
Wags say that one needs to understand the Caribbean as music with an African rhythm and a European melody. In addition to being literally true, the aphorism serves as a helpful lens to see the particulars of approaches to TA reform that will work in the Caribbean environment.
The Caribbean island nations are in a much better position to develop themselves through vibrant economic strategies than countries in some other parts of the world where basic health and education services are absent. Well-designed expenditure and tax policies, together with sound budget institutions and revenue collection systems, are necessary ingredients to making any economic strategy work.
The Caribbean islands, however, have large debt burdens and limited economic diversification (often visible as tourism dependence that leaves them vulnerable to the disastrous effects of the global recession). Island brain drain is a huge obstacle to continuing good governance and development: more than 80% of college graduates from Guyana and Jamaica leave their country to work abroad. The governments, while grappling with basic security and stability issues, know that if they do not create an environment which keeps young people- with their well developed modern skills - on island, the other improvements may be irrelevant.
RA: Does the ambivalence in regional identity work for or against the smooth provision of TA?
EZB: One might say that the region’s complexity has at its root the continually belabored question of its identity: whether it is one larger nation separated by miles of waves; whether it is defined by continuing reactions to its past; or whether it can move itself smartly into the future while preserving the best of its heritage. The West Indian Federation formed before independence was short-lived, dissolving itself shortly after Jamaica’s pull out in 1961, following a populist referendum. CARICOM now represents 14 nations seeking to harmonize laws and create a single market with ‘more and better opportunities to produce and sell goods and services and attract investment’ through voluntary compliance. COMMSEC offers regionalization benefits to those countries that remain a part of the British Commonwealth. Yet there seems to exist no strong desire to adopt systems with built-in controls that would allow their application among islands, despite the economies of scale that might be realized. One may well wonder if such recent sovereignty counsels against the kinds of highly-controlled centralized systems imposed during the colonial system. And if the lingering memory (or the lingering systems themselves) dampen the small nations’ enthusiasm for interdependence, including in the area of public finance.
The islands’ cultural values and norms also affect the degree of modernization and alignment with international standards that CARTAC members choose. Many counterparts advise that ‘discretion is the most important currency in the Caribbean.’ And reforms of PFM systems demand transparency and uniform application of rules – the opposite of opaque discretion. As we think about such reforms, we seek to assist governments create institutions that provide the right information at the right time to make factually informed choices. As remnants of colonial systems broke down, governments often resorted to discretionary interventions, many of which were neither recorded nor made widely known. People ‘fixing’ the systems became powerful because they could ‘fix’ but they also clouded the decision-making processes. The efficiency, effectiveness and transparency of modern PFM systems are the nemesis of unfettered discretion.
RA: Back to CARTAC, do these cultural norms mean efforts at TA are futile?
EZB: Not at all. The cultural realities simply mean one needs to formulate reasonable expectations based on the conditions that exist. CARTAC tries to approach TA with the respect for counterparts, existing conditions and preconceptions. It encourages and supports TA in any mode or method and at whatever pace allows sustainable improvement. It recognizes that small organizations get reform fatigue faster than large ones. Therefore, CARTAC works on discrete areas that have been identified by the members as requiring assistance rather than insisting on set programs or work on every aspect of the PFM continuum.
It is important for TA purveyors to understand that the colonial institutions that continue to linger on in a post-colonial world may be the only model they have ever observed. Study tours within and outside the region can be very useful in broadening awareness of other systems and cultures. In nations that are so small that telling inconvenient truths may prove permanently uncomfortable, assessments of weaknesses must be both accurate and blame-free. Timelines for effecting change must likewise recognize the pace at which organizations and the friends and neighbors who staff them can absorb change.
So, in the Caribbean the size and scope of TA efforts are important in designing sustainable improvements. It has become fairly clear that overnight changes, whether enabled by a temporary cadre of specialists or by IT companies promising ‘silver bullet’ automation, have limited on-going value. When an entire payment system is replaced quickly, efficiently and without sufficient buy-in, the automation may be implemented but largely unused: manual systems continue to be maintained, accountability is stymied because tradition is allowed to trump whatever is ‘reformed.’ The reforms, when managed by an elite group, do not replace the older way of doing things. Often this occurs because there has not been enough participation, communication and training. Small islands mean small ministries of finance with small budget and accounting sections. Post-colonial civil service systems seem to be particularly intolerant of flexibility of duties, thus lengthening the time needed for implementing reforms.
RA: How is CARTAC organized?
EZB: CARTAC itself is governed by a strong, diverse, and involved steering committee that demands responsiveness and accountability. Key officials of member countries - governors of central banks, financial secretaries with budget, investment and revenue portfolios - are joined by development partners to review and monitor progress of work programs from their varied perspective. They jointly consider:
- Are the work programs focused on the most relevant issues?
- Is sufficient care devoted to understanding the risks to continued economic stability and growth?
- Are potential positive economic elements being developed in the most balanced way?
- Are there technical processes in place that enable good administration of available resources?
- Is local and regional capacity being developed so that progress is sustainable?
RA: That sounds like CARTAC is pretty independent and self-directed. Is there a role for the IMF Headquarters to play?
EZB: CARTAC has been quite effective in leveraging the vast knowledge and experience of IMF staff. The Area Department, in this case Western Hemisphere, is kept apprised of the plans and progress for TA and it in turn makes sure that CARTAC understands the larger issues arising from the Fund’s surveillance work. The technical departments, FAD in the case of PFM and revenue administration, offer the discipline of back-stopping by seasoned professionals to assure quality, and incredible wealth of experience of reform in all parts of the world.
Similarly, the processes CARTAC has put into place for planning, decision-making and funding decisions mesh seamlessly with the Fund’s processes for quality assurance both in terms of oversight and evaluation.
RA: What are the most challenging issues that PFM reformers in the Caribbean have to deal with?
EZB: Big issues in the Caribbean tend to revolve around three things: building basics before frills; fully utilizing whatever new systems are implemented; and understanding the on-going training needs of modern ministries of finance.
It is pretty universal around the world for governments to become enamored of some proffered ‘silver bullet’ of reform that assumes more capacity than a country possesses and without the necessary prerequisites being in place. The Caribbean region is not immune to such practices. Often those touting these magic bullets do not fully explain the conditions and prerequisites needed to make them work, thus dooming them to failure. Some software vendors, for example, cite short installation timelines, omitting to mention all the non-IT technical requirements needed for their proper use. Similarly, infrastructure requirements such as connectivity and uninterrupted power supplies cannot be taken for granted even though their absence spells disaster. Perhaps the post-colonialist culture explains why less ambitious, incremental, and therefore slower change is often the most fruitful approach in the Caribbean.
RA: What do you hope to leave behind when your CARTAC stint is completed? What does Eileen Browne see as her legacy?
EZB: I hope to be a spur that allows dedicated people in government to improve the systems and processes they work with by supporting their reform efforts. I am confident I will continue to discover a wealth of talent in the countries I work in, and succeed in persuading these officials to develop their skills for the wider benefit of the region. I am told by my Jamaican fellow reformers that I give them energy to persevere. In the end, however, I will doubtless take away more from the Caribbean than I will leave: real friendships based on respect for serious people attacking real problems with whatever resources they can marshal; deeper understanding of how culture affects reform; and some of the best food, music and art anywhere. I have always found TA a pleasurable challenge and one that brings its rewards exponentially.Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.