WASHINGTON, DC – The Inter-American Development Bank (IDB) Tuesday said Caribbean economies have achieved notable fiscal consolidation and debt reduction despite the persistence of high global interest rates and volatile energy markets.
The IDB’s latest edition of the Caribbean Economics Quarterly (CEQ), titled “Fiscal Resilience, Debt Reduction and Domestic Resource Mobilization in the Caribbean,” examines the fiscal and debt trajectories of six member countries, namely The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago.
It finds that half of these countries have successfully reduced their debt-to-gross domestic product (GDP) ratios below pre-pandemic levels, demonstrating the effectiveness of disciplined fiscal management and credible institutional frameworks.
However, the report warns that the regional fiscal environment remains challenged due to tighter global financial conditions rather than a deterioration in investor perceptions of the Caribbean.
“Caribbean nations have navigated an extraordinarily complex series of global shocks in the recent decade with impressive policy discipline,” said Anton Edmunds, IDB general manager for the Caribbean.
“The data shows that substantial debt reduction is possible when governments maintain credible fiscal frameworks. Moving forward, the priority must be building more productive, fair, and resilient revenue systems that can finance both debt reduction and critical investments, including in disaster risk management,” he added
A central finding of the report is that the region collects less revenue than it needs for sustainable development and disaster resilience. Tax revenues in the Caribbean averaged 21 per cent of GDP in 2023, below the Latin American average of 22 per cent and the Organization for Economic Co-operation and Development (OECD) average of 34 per cent.
The CEQ highlights several cross-country reform priorities to address this gap, including modernizing tax administration through digital technologies, rationalizing tax incentives and exemptions, and strengthening stable revenue sources such as property taxation.
For oil and gas producers, the report stresses the importance of strong fiscal rules and sovereign wealth funds to smooth revenue volatility and preserve wealth for future generations.
