Middle-Income countries need fair access to finances, says PM Mottley

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Prime Minister Mia Amor Mottley gives a keynote address online at the Sixth Caribbean Development Roundtable of the UN Economic Commission for Latin America and the Caribbean. (Photo from Comisión Económica para América Latina y el Caribe (CEPAL))

By Sharon Austin

BRIDGETOWN, Barbados, (BGIS) — Prime minister Mia Amor Mottley says middle-income countries need fair and predictable access to non-market finance based on their vulnerability. Mottley expressed this view delivering an online keynote address, at the Sixth Caribbean Development Roundtable of the UN Economic Commission for Latin America and the Caribbean.

The prime minister said the Latin America and Caribbean region was stuck in a middle-income country trap. She noted that middle-income countries of mid-to small size were even more dependent on the global economy than the poorest of the largest.

“So, we are acutely vulnerable to systemic global shocks. But being middle-income countries and mid-to-small size, we do not have the tools that large, developed countries have to respond to these shocks. Shocks we did not cause. We cannot engage in quantitative easing or a massive fiscal stimulus. We do not have an international system of private financial flows that can diversify our risks and smooth out these turbulences. The system today, provides liquidity when it is needed and takes it away when it is not. For too many of us, it is not fit for purpose, which is why we need fair and predictable access to non-market finance on the basis of our acute vulnerability,” she stated.

Mottley is of the view that the international financial system is broken and suggested that the systemic problem could not be corrected with ad hoc fixes and one-off concessions. She insisted that a systemic solution was needed.

“For too long, the Caribbean has been absent from the debate on the international monetary system’s reform. We have ourselves to blame and we need to get back there. It will be reformed, and unless we are in the room, participating in the debate, making the case, brokering compromise, the opportunity for meaningful reform that works for middle-income countries will be missed. […] Almost all reforms to the financial and international systems have been forged in the heat of a crisis. […] We burden under this crisis, struggle to survive, but we must not neglect this moment to fashion a better system for all,” she emphasised.

The prime minister stressed the importance of the Liquidity and Resilience Facility solution, saying it could lower the cost of funding infrastructure projects by up to two percentage points, which would then have a meaningful impact on countries’ ability to afford needed infrastructure investment.

“The Resilience and Liquidity Facility is a facility limited to high-quality asset managers to repo bonds, that finance resilience infrastructure. It will allow the issuers of these bonds to benefit from a significantly lower cost of capital. We could begin this Facility today by establishing an independent agency with a credit line with multilateral development banks to borrow cash against a large pool of middle-income country bonds that finance resilience,” she explained.

The full address is available here.

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