Dominica raises EC$20 million on regional securities market

Go Lean Commentary

imagesThe forgoing news article synchronizes with the book Go Lean … Caribbean in that it advocates the alternative financing scheme for government debt; that of treasury bonds in the region’s security markets. The news article further describes the success using the existing monetary union for the Eastern Caribbean states. The Go Lean roadmap extrapolates that monetary union for all 30 member-states and the stronger currency of the Caribbean Dollar. This approach exceeds the current regime for many Caribbean states, that of foreign debt, which has to be repaid in foreign currency.

This book therefore promotes independence (Page 120), by being less beholden to foreign powers and foreign banks. Yes, independence by means of interdependence.

Roseau, Dominica – Dominica raised EC$20 million (One EC dollar = US$0.37 cents) on the Regional Government Securities Market (RGSM) on Monday with with Prime Minister Roosevelt Skerrit saying it represents confidence in the policies of his administration.

The money was raised at a record low 1.999 per cent through the first of a series of three 91-day Treasury Bill offerings.

“Many countries in the developed world especially in Europe have had difficulty in raising monies at concessionary rates. The discount rate achieved in Monday’s Treasury bill offering means that government can now raise the financing it needs at a lower cost to the taxpayers of Dominica,” said Skerrit, who is also finance minister.

He said his administration has had to grapple with Dominica’s own challenges “but we have worked actively to build a strong platform for sustained economic growth.

“Our prudent fiscal and economic policies have insulated the country from the more severe effects of the global recession,” Prime Minister Skerrit added.

A government statement said that the rate of 1.999% is 50 basis points below the previous record of 2.49%.

“Investors view the purchase of the 91 day Treasury bill as a low-risk investment opportunity. The low Treasury bill rate demonstrated the ability of the Government of Dominica to raise money at relatively low cost,” the statement said.

It said that as a result, the government will seek to raise an additional EC$65 million on the RGSM through the remaining two, 91 day Treasury bills and one five year, EC$25 million bond.

“This is to finance part of government’s operating budget and refinance existing government debt, the interest rate on which is much higher than the interest rate government obtains on its Treasury bills. Treasury Bills present an avenue to invest outside of the normal banking system,” the statement added.
Source: – Caribbean Online Magazine (Retrieved 03/21/2014)

This book serves as a roadmap for the implementation of the Caribbean Union Trade Federation (CU), and the Caribbean Central Bank (CCB) to issue the regional Caribbean Dollar currency. This CCB institution is projected as an independent, yet technocratic federal agency to administer the region’s monetary affairs. Thus ushering a change in funding options available to the 30 member-state governments. At the outset, the roadmap identified this urgent need, stating this clause in the Declaration of Interdependence (Page 14):

xxix. Whereas all Caribbean democracies depend of the free flow of capital for municipal, public and private financing, the institutions of capital markets can be better organized around a regional monetary union. The Federation must institute the controls to insure transparency, accounting integrity and analysis independence of the securities markets, thereby shifting the primary source of capital away from foreign lenders to domestic investors, comprising institutions and individuals.

The foregoing news article depicts how much cheaper this funding approach is compared to alternatives, as Grenada was able to raise so much short term money at a low rate of 1.999%. This is much cheaper than any bank loan option. But with this alternative financing scheme, come new risks and threats. The Go Lean roadmap anticipates the many consequential impacts on Caribbean society, allowing for best-practice mitigations, such as credit ratings and reporting, investigations and prosecutions at the federal level, monitoring for systemic threats and racketeering crimes that can undermine the entire system.

The book details this oversight in these advocacies and anecdotes, embedding lessons from other jurisdictions like Wall Street in the US:

  • 10 Ways to Impact Wall Street (Page 200)
  • 10 Lessons from 2008 (Page 136)
  • 10 Ways to Improve Credit Reporting (Page 155)
  • 10 Ways to Better Manage Debt (Page 114)
  • 10 Revenue Sources for Caribbean Administration (Page 172)
  • Appendix GC – Credit Ratings Agencies Role in 2008 Financial Crisis (Page 276)

The CU/CCB solutions are designed to make the Caribbean a better place to live, work and play. This roadmap starts with an economic focus, but it also facilitates optimization of the governance processes. To maintain good governance, there must be a steady stream of revenues. The Go Lean roadmap calls for member-state governments availing more benefits from the capital & securities markets; for example, public sales of property tax liens. This strategy will be a “win-win” for all, elevate the social contract between the governments and the governed: more revenues drive more services; more services drive more opportunities to benefit the citizens (and all other stakeholders: investors, visitor, diaspora, etc.) of the Caribbean.

Download the book Go Lean … Caribbean – now!

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