The pandemic and global trade disruptions have highlighted the growing vulnerability of Caribbean states when it comes to importing food items. Annually, Caribbean states import food items valued at nearly US$5 billion for food security.
International border closures to curb the spread of COVID-19 meant restricted access to these imported food items which make up more than 80 per cent of the region’s food system.
A household survey commissioned by Caribbean governments in April 2020 to explore the impact of the pandemic on regional food security revealed that global border closures increased barriers to food security by augmenting food prices and decreasing income and employment levels. The survey data also revealed that more than half of all respondents experienced income or job loss.
The impact of international border closures on food security
Tourism supports a large percentage of economic activity in the Caribbean. International border closures, which prompted the near-total shutdown of air and cruise travel to curb the spread of COVID-19, dealt a catastrophic blow to the Caribbean’s tourism industry.
The decline in tourism led to decreased spending by tourists, hotel and associated tourism service closures and job losses for community members. Such outcomes translated to higher levels of indebtedness, unemployment and psychological stress, disproportionately affecting vulnerable populations throughout the Caribbean.
All of these factors made many residents anxious about their ability to ensure food security in the coming months, because without money they cannot afford to buy food.
The downward economic spiral
Downward growth spirals across vital economic sectors like tourism prompted Caribbean states to turn to international development institutions such as the World Bank and the International Monetary Funds (IMF) for emergency loans during the pandemic.
Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean, highlighted concerns back in April, 2020 about the emergency loans stating “borrowing is not the answer to confront this crisis. Caribbean countries need grant support fast. There is need for urgent intervention to ensure liquidity.”
According to Bárcena, Caribbean countries are spending between one per cent and four per cent of GDP to tackle the COVID-19 crisis. Growing external debt burdens to replace income and ensure social outcomes, like food security, worsened the Caribbean’s debt to GDP ratio, which averaged 68.5 per cent in 2019.
The growing debt problem
The rising debt burden facing Caribbean states is largely because most hotels and restaurants in the region’s tourism sector import bulk supplies of low-priced food items. The priority for cheap imported food for tourist consumption means that as much as 80 cents from every dollar generated in the Caribbean’s tourism sector leaves the region each year.
While the pandemic disrupted tourism growth, the extreme external debt levels facing Caribbean states are increasing. And governments are becoming more responsible for social outcomes like food security.
Over the past 12 months, the IMF provided more than US$1 billion to Caribbean countries.
Relative to annual foreign exchange earnings in a thriving island economy, US$1 billion in emergency loans seems immaterial. However, in just paying the interest on external debt accumulated on emergency loans offered by development institutions like the IMF, some Caribbean island states allocate up to 54 per cent of their annual budgets to external debt servicing.
Small islands, like the Bahamas are spending up to US$ 1 million each week on food assistance programs — all while increasing financial support on health spending for COVID tests, treatment, vaccinations, surveillance and protective equipment.
In shifting the responsibility for social welfare from people to the state, COVID-19 is worsening the growing external debt problem across small Caribbean states.
Food security in the post-Covid-19 economy
In April 2020, Antigua and Barbuda’s Prime Minister, Gaston Browne, issued a call to international development institutes, like the IMF, for alternative development approaches, he said:
“The economic burden for our countries has been unsustainable because of the high levels of debt. We don’t have the capacity for printing money and our policy instruments are very limited. What is required at this point is some level of support from international financial institutions, such as the International Monetary Fund and the World Bank.”
Debt relief would improve Caribbean states response to global crises. Less debt means that governments can increase spending on social services that would improve economic conditions to ensure food security. It really is the only solution.
A post-pandemic recovery pathway to ensure Caribbean food security involves the IMF and other development entities recognizing the unsustainable debt situation across Caribbean island states and including the region in considerations extended to other developing countries for debt relief.