Caribbean countries have been told that reducing energy costs will help the region improve growth and strengthen competitiveness.
But at the same time, regional policymakers face conflicting objectives. On the one hand, investment in an effective energy reform strategy would have long-term benefits, while on the other, few countries have fiscal space to embark on ambitious investments to reform the energy sector.
The situation confronting the region in its energy sector is discussed in a paper titled “Caribbean Energy: Marco Related Challenges’ written by a number of financial experts including the prominent Grenadian-born economist, Arnold McIntyre, and released by the International Monetary Fund.
They argue that the substantial decline in oil prices since mid-2014 does not obviate the need for energy sector reform.
The study noted that the cost of electricity in the Caribbean has been persistently high over the past two decades, and has eroded competitiveness.