“…this seminar is particularly timely, especially in light of the fact that the Caribbean is moving towards the creation of the Caribbean Single Market and Economy (CSME) and possibly the establishment of a monetary union,” he noted in the opening address at the Hotel Tower in Georgetown.

Kowlessar said success in reforming monetary policies to meet the emerging global challenges will only be achieved through consensus, sharing of ideas and from experience.

"These seminars have become a tradition, and we in CARICOM benefit greatly from this opportunity to bring together senior central bankers, academics and policy-makers to exchange ideas and develop positive thinking on current issues,” he pointed out.

The Minister said endeavours such as the CSME will only succeed through consensus building and cooperation by policy-makers on certain key economic areas, which in turn is only possible, “if we in the region continue to commit ourselves to the sharing of ideas, information and policy experience via seminars such as the one we have today.”

Kowlessar noted that the meeting is being held when monetary policy operates in a different economic environment from that which existed a decade ago, where global economics is characterised by financial market deregulation and liberalisation.

"These developments have resulted in the erosion of the distinction of monetary assets, thereby making the definition of money increasingly arbitrary," the Minister pointed out.

He said the theme of the seminar 'Challenges for Monetary and Exchange Rate Regimes in the Caribbean' could not have been more appropriate in view of the many national, regional and international developments which will certainly have considerable implications on the way monetary and exchange rate policies are conducted in the Caribbean.

Kowlessar explained that the goal of monetary policy is to maintain price stability and urged that this be geared to meet the emerging challenges of growing competitiveness as a result of globalisation.

This can be accomplished through the development of a responsive exchange rate to promote sustainable growth and development.

The Minister cited the East Asian experience of capital flight, a situation which was arrested with competitiveness achieved through prudent monetary policies and active management of the nominal exchange rate.

"Hence, maintaining a competitive real exchange rate has been a key component of the outward oriented development strategy of the East Asian countries," he said, adding that this was possible because the countries in question were successful in managing inflation rates and financial institutional structures.

Touching on the local economy, Kowlessar noted that during the last decade Guyana benefited significantly from structural adjustment programmes and achieved an average of 4.5% annual growth, while inflation which was running at over 100% in 1990, was brought down to 2.6% in 2001. Interest rates at banks fell from 35% to about 8.7% during the same period.

The external debt has been reduced to US$1.2 Billion from US$2.1 Billion where it stood in 1992 and foreign exchange reserves have risen to US$280M.

However, the Minister noted that there still exists a "fragility" in the country’s economic recovery and attributed this mainly to a sluggishness in local demand, fall in commodity prices and the global slowdown, which is putting a strain on Guyana's exports.

He said that this period is more one of consolidation rather than expansion.

In the circumstances, the Government has adhered closely to its budgeted spending so as to avoid increases in its fiscal deficit and thus was able to maintain a 6.5% deficit of Gross Domestic Product (GDP), Kowlessar reported.

"A key challenge confronting macroeconomic policy in Guyana is to safeguard the spate of recovery, while at the same time maintaining macroecomic stability and financial discipline," the Minister said.