Earlier this year, the government of the small Caribbean twin-island federation of St. Kitts and Nevis complained bitterly to the international community about being expelled from the club of developing nations eligible for concession or soft loans because multilateral financial institutions like the World Bank had reclassified it as a high income economy, graduating it from the list of countries which qualify for special treatment.
The Caribbean Community of nations of which the federation is a member, took up its case pleading for reconsideration of the entire concept of reclassification of countries as they are still relatively poor, dependent on fragile industries like tourism and are prone to annual disasters like earthquakes and hurricanes.
Now, authorities in neighboring Antigua are making similar sounds because the World Bank has dropped a similar classification on its economy, moving it from upper middle class to high income and leaving it in the lurch as far as concession aid and loans are concerned.
Back in 2010, Antigua and its small sparsely sister island of Barbuda had made the list of high economy economies but slipped back into upper middle because of the vagaries of the global recession back then.
The Jamaica Gleaner which is paying attention to the case of Antigua and other regional trade bloc countries noted that the island of about 100,000 people including thousands from Guyana, Jamaica, the Dominican Republic and some of the neighboring small islands, had been so re-categorized since July of this year but officials had not said much publicly about the issue until recently.
Countries so classified are those deemed to have national per capita incomes of above $12,600. The latest to join this group apart from Antigua includes Chile, Latvia, Lithuania, Uruguay and Russia.
The lowest categories that are likely to include Haiti should see per capita incomes of just over $1,000 to upper middle of $4,086. These categories account for most of the regional economies in the Caribbean but few governments want to hear anything about graduating from one category to another as it means less favorable borrowing terms or being ineligible for some forms of grant aid.
Antigua’s new classification comes just weeks after trade bloc boss Irwin Larocque pleaded with the international community for a review saying member nations were hamstrung by the new rules of graduation or differentiation as is the case with western nations and the big financial institutions.
“It would be desirable for them to provide additional sources of financing, especially in grant form and in a manner that is easily accessible,” he said in Haiti at the launching of the Caribbean’s Aid for Trade (AFT) strategy. Unless urgent action is taken to change the criteria and adjust the policies which created this untenable situation, the debt per capita of some Member States, already among the highest in the world, could escalate, virtually rendering useless any loan based assistance, particularly at this time of severe fiscal and economic challenges,” LaRocque said.