The strategic context of the Special Development Fund (Eighth Cycle) (SDF 8) is defined by the results of the Special Development Fund (Seventh Cycle) (SDF 7)Mid-Term Review (MTR), unfinished business of SDF 7 and the Region’s development challenges. These challenges include slow and variable economic growth, unsustainable levels of public debt which results in limited fiscal space to implement growth-enhancing economic and social programmes, the persistence of unacceptable levels of poverty and inequality, and a high degree of vulnerability to external economic shocks and natural hazard events. To these must be added the issue of citizen security which has emerged as a major challenge in the Region. Increasing crime and violence in the Caribbean imposes high social, economic and cultural costs.
These challenges have to be addressed in SDF 8 but with even greater urgency, than in SDF 7, given the impact of the global crisis on the Region and the implications of a second recession should the European fiscal crisis remain unresolved. It is proposed that the SDF 8 strategy be based on two pillars, inclusive economic growth, vulnerability and resilience, and a foundation–governance and public sector capacity.