1. A Discourse on Debt and Economic Growth in the Caribbean Community by Professor Compton Bourne, PhD, O.E.

2. CONTEMPORARY DEBT SITUATION CARIBBEAN COUNTRIES ARE HIGHLY INDEBTED Debt as % of GDP Country Total Public Debt as % GDPExternal Debt as % GDP 1997200419972004 Antigua & Barbuda102996064 Bahamas4746910 Barbados67861624 Belize431023474 Dominica621153573 Grenada411293077 Guyana211166204137 Jamaica1031394458 St. Kitts & Nevis861793982 St. Lucia35702243 St. Vincent & the Grenadines 48794454 Trinidad & Tobago52452713

3. Contribution of Debt to Economic Growth y = af(k) s n+w=k

4. Debt Sustainability Old Version Focuses on Debt Service Relative to Fiscal Revenues and Exports of Good and Services. Data Indicative of Problem of Diminution of Debt Capacity. Modern Version Focuses on Primary Surplus. The Easterly Formulation – ∞ ∫ e ‾ rt (T t + A t - G t ) d t ≥ D o 0 where T is tax revenues, A is Net debt inflows, G is government expenditures, D is public debt stock, and r is the discount rate

5. Debt Sustainability p/(r-g) = D o /Y o T t + A t - G t ) /Y t = (r-g) D t / Y t Interest Rates Rose and Economic Growth Rates Decreased 1997-2004 in the Caribbean causing the Required Primary Surplus to Increase

6. Debt Sustainability Annual Growth Rate of Real GDP % Country Year 1990-19971998-2004 Antigua and Barbuda3.03.8 The Bahamas0.92.8 Barbados3.41.8 Belize5.76.9 Dominica2.70.1 Grenada2.83.1 Guyana5.90.6 Jamaica1.01.2 St. Kitts and Nevis4.52.5 St. Lucia2.31.4 St. Vincent and the Grenadines3.33.2 Trinidad and Tobago2.07.1

7. Towards a Conclusion THE END