Notwithstanding the exogenous shocks which these economies face, it is increasingly clear that a sound macroeconomic framework is a prerequisite for sustainable growth. At the same time, structural weaknesses often undermine resilience and compromise the buffers necessary to cope with economic shocks.
Several regional economies face chronic external current account imbalances which are funded by a combination of foreign direct investment, public sector borrowing and the depletion of international reserves. Persistent fiscal deficits resulting from deliberate fiscal strategies or the inadvertent outcomes resulting from economic or natural shocks have led to the significant build-up of sovereign debt in several jurisdictions.