EDITORIAL: Trying to make sense of a nonsensical criteria

0
875
- Advertisement -

Prime Minister Gaston Browne has been pressing the point that the current income classification of counties is a “nonsensical criteria” as it relates to the direct impact on various vulnerable nations, such as ours, having access to loans and the terms of the loans themselves. He has called on the developed countries to cease using per capita income for the purpose of deciding on loan availability and interest rates.
He most recently reiterated the call in a passionate speech at the Caribbean Strong Relief Concert and Telethon and added that developed nations in the western hemisphere have an “obligation” to make substantial contributions to Barbuda and Dominica.
He said, “It is inappropriate for you to use these artificial impediments to say that Barbuda, in a time of crisis,is not deserving of your assistance.” Adding, “It is absolutely ridiculous for the developed world to take positions that they cannot help Dominica because they are too wealthy.”
The PM has taken some criticism on his approach and the message, but regardless of political affiliation, the PM has a point.  So before you throw the message out because of your political distaste of the messenger, listen to the point and make your decision based on its particular merit.  We think that once you do, you will see that the message has merit.  With that in mind, let’s look at the basic argument in the most layman’s terms that we can.
First, let look at the classification methodology.  According to the World Bank, “Each year on July 1, the analytical classification of the world’s economies based on estimates of gross national income (GNI) per capita for the previous year is revised. As of 1st July 2016, low-income econo-mies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $1,025 or less in 2015; lower middle-income economies are those with a GNI per capita between $1,026 and $4,035; upper middle-income economies are those with a GNI per capita between $4,036 and $12,475; high-income economies are those with a GNI per capita of $12,476 or more.”
With our GNI per capita standing at $13,400 in 2016, that means that we are now classified in the high-income bracket alongside 65 other countries such as Australia, Canada, Germany, Kuwait, Qatar, Saudi Aradia, the United Kingdom and the United States of America. That is some pretty lofty company!
At one level, we should be proud that our little bit of paradise has reached those “heights” but on the other hand, we are now penalised for our “success”.  But to better understand the reason that the PM has labelled this criteria as “nonsensical”, consider the purchasing power of our dollar and the fact that we are a small island with no natural resources other than sand, sea, sun and human.  By the way, Dominica’s $6,750 GNI per capita puts them in the category of upper-middle-income economy.
For example, let us compare ourselves to the United States.  In 2016, that country had a GNI per capita of $56,180.  Following the passage of Hurricane Irma, folks in Florida could run down to their local Home Depot and pick up a sheet of  plywood for about $30.  Take that sheet of plywood, put it on a boat, and ship it to our shores, and it is no longer $30 dollars.  No, it is considerably more than that, and when taken as a percentage of our GNI per capita, it is multiple times as much (since the U.S. starts with an advantage of over a 4 times multiple on our GNI per capita).
Car got flooded or damaged?  Maybe it was a pick-up, like a Nissan Frontier, that doubled as a work vehicle and family car.  You can walk into a Florida dealership and pick up a new Frontier for (starting) under $20,000, but it is nothing near that price when you walk into Hadeed Motors.  Let’s be simplistic and say that you could get it for double that price, somewhere around $40,000 or E.C. $100,000; let’s do a bit of math.   To buy that pick-up will require almost three years of 2016 GNI per capita income for someone in Antigua and Barbuda but not even a year for someone in the United States. For a Dominican, much, much more!
We could list these examples all day but that is essentially why a strict reliance on GNI per capita as a major factor in classifying countries, especially ones as small and vulnerable as ours, is “nonsensical”.
It impacts our ability to gain concessionary loans at times like this, and when devastation is an everyday word to describe the general environment in Barbuda and Dominica, it is hard to reconcile that the world puts us in a category of high or upper-middle economies and well able to fend for ourselves against the literal rising tide of climate change.
We invite you to visit www.antiguaobserver.com and give us your feedback on our opinions.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here