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Arnold McIntyre, Ahmed El-Ashram, Mr. Márcio Valério Ronci, Julien Reynaud, Ms. Natasha X Che, Ke Wang, Mr. Sebastian Acevedo Mejia, and Mr. Mark Scott Lutz
High energy costs contribute to dampening Caribbean competitiveness and potential growth. This paper overviews power sector challenges and takes stock of national and regional strategies to address them. It presents recommendations to move the energy agenda forward based on analyses of macro-aspects of energy reform. These include: i) quantitative assessment of the impact of energy costs on growth and competitiveness; ii) evaluation of gains from implementing announced renewable energy and energy efficiency targets; and iii) analysis of the impact of energy investments on debt sustainability. The paper argues for a bigger role for the private sector in energy reform and discusses prerequisites for good public-private partnerships.
Ahmed El-Ashram
The question of how scaling up public investment could affect fiscal and debt sustainability is key for countries needing to fill infrastructure gaps and build resilience. This paper proposes a bottom-up approach to assess large public investments that are potentially self-financing and reflect their impact in macro-fiscal projections that underpin the IMF’s Debt Sustainability Analysis Framework. Using the case of energy sector investments in Caribbean countries, the paper shows how to avoid biases against good projects that pay off over long horizons and ensure that transformative investments are not sacrificed to myopic assessments of debt sustainability risks. The approach is applicable to any macro-critical investment for which user fees can cover financing costs and which has the potential to raise growth without crowding-out.
Ahmed El-Ashram

calculated in percent of historical average operating expense over (2012–2015). 25 Estimates of energy investment needs in the Western Caribbean and Barbados include the cost of converting existing plants run by fuel oil to natural gas-fired facilities. 26 At 2015 fuel oil prices (the ‘2015 average’ scenario), renewable energy introduction in the ECCU, including geothermal power, appears to provide limited to no cost savings under given financing and generation cost assumptions, while introducing natural gas would seem viable mainly because of the significant

Arnold McIntyre, Ahmed El-Ashram, Mr. Márcio Valério Ronci, Julien Reynaud, Ms. Natasha X Che, Ke Wang, Mr. Sebastian Acevedo Mejia, and Mr. Mark Scott Lutz

’ operating costs under baseline projections for the prices of natural gas and distillate fuel oil by the U.S. Energy Information Agency. 42 Countries where hydroelectric power capacity is significant, such as Belize and Suriname, will enjoy overall lower energy costs. At 2015 fuel oil prices (the ‘2015 average’ scenario), renewable energy introduction in the ECCU, including geothermal power, appears to provide limited to no cost savings under given financing and generation cost assumptions, 43 while introducing natural gas would seem viable mainly because of the