Private Sector External Debt in the Caribbean: The Stylized Facts

Abstract

As we pay attention to the private sector as a conduit for growth in the Caribbean, the need for additional information on the size, composition and riskiness of their debt becomes more important. This is a critical, but less frequently discussed, component of the private sector-led growth discourse. This paper analyses the external liabilities of the private sector using external vulnerability ratios and descriptive statistics. It provides insights into the size and maturity structure of private sector external debt (PSED) in the Caribbean Region. The results indicate that PSED in the Caribbean has increased in recent years and comprises mainly long-term instruments. Additionally, the external vulnerability ratios suggest that the external debt of the private sector is not insignificant in the countries analysed. The results justify the need for strengthened data to enable closer investigation into the extent of the vulnerability, particularly to sudden changes in PSED flows. This paper recommends that greater effort be placed in the compilation and reporting of PSED in the Caribbean Region. It argues for an approach that gives focused attention by the compiling entity to reduce the challenges related to data compilation and also to better understand and address the issues and possible incentives for the reporting organisation to increase the supply and accuracy of PSED data.