SAN JUAN – Following Puerto Rico’s default, Jamaica could be the next Caribbean country to succumb to the “silent debt crisis” that has been building in the region over the last 30 years, U.S. rating agency Moody’s said Tuesday.
The Caribbean region has become one of the most indebted in the world and its economies are “more vulnerable” to external shocks, Moody’s Senior Vice President Elena Duggar told EFE in a phone interview.
“If history is to serve as a guide, more defaults are very likely by the highly-indebted countries in the region,” according to Duggar, co-author of the report “Caribbean Sovereigns: The Silent Debt Crisis.”
“Most economies in the region are reliant on cyclical industries that are susceptible to external shocks,” she said. “Large exposure to natural disasters only makes the situation more challenging.”
The analyst said the region is likely to experience a fourth wave of sovereign defaults.
The first wave was part of the Latin American debt crisis of the 1980s; the second occurred in the early 2000s; and the third struck after 2008, mainly affecting the members of the Eastern Caribbean Currency Union: Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines.
The four Caribbean states with the highest debt-to-GDP ratios are Jamaica, 133 percent; Antigua and Barbuda, 107 percent; Grenada, 107 percent; and Barbados, 103 percent.
The key factors contributing to debt distress in the Caribbean region are natural disasters; economic volatility; banking and currency crises; and socio-economic challenges such as high crime rates, poverty and unemployment.