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Ex PM warns that Barbados may be getting the worst end

Government continues to say “no” to any formal programme with the International Monetary Fund (IMF).

However, former Prime Minister Owen Arthur has sought to warn Barbadians that they may in fact be getting the “worst” end of the IMF stick, on account of the Government’s current economic policies and programmes.

In a statement issued last weekend in response to the latest Standard & Poor’s downgrade, Prime Minister Freundel Stuart said there were those who appeared to believe that Barbados lacked the capacity to execute its strategy for growth and development and would be forced to appeal to the IMF to take charge of its affairs.

However, Stuart contended that “we Barbadians know better”, while insisting that his Government had set a course, crafted its needs and remained resolute in pursuing that strategy to the successful revival of economic growth in 2015 and beyond.

Former Prime Minister Owen Arthur

Former Prime Minister Owen Arthur

In responding to Stuart, Arthur pointed out that many of the Government’s current plans and programmes, including its controversial 19-month Fiscal Consolidation Programme (FCP) that was recently extended by one year, were either “IMF-influenced or “bear a sound relationship to what is recommended by the IMF in its Article 4 consultations”.

Arthur, who is an economist by training, further pointed out that it was currently a requirement by institutions, such as the Inter American Development Bank (IDB), which has provided financial support to Government for the FCP and several other policy-based loans, that Barbados pursues policies deemed “acceptable to the IMF”.

The former Minister of Finance therefore warned that if the Democratic Labour Party-led administration continued to follow IMF policies without taking IMF funds, Barbadians would “end up getting the worst of both worlds”, since from his experience and assessment, “IMF policies means you are going to have to follow these rough policies [without] the IMF funds that are intended to help you to assuage the pain that the IMF policies cause”.

Arthur further pointed out that  a similar situation existed back in 1994 when late Prime Minister David Thompson had the country under “an enhanced IMF surveillance programme”.

“We weren’t getting funds but we were about to follow IMF policies,” noted Arthur, who stopped just short of saying the island needs to enter a formal programme, but boasted that he had so carefully navigated the island during his tenure as prime minister to keep it away from the IMF‘s clutches.

Reacting to the comments by Arthur, Minister of Finance Chris Sinckler said there needed to be consistency in the debate on this matter. He charged that some of the same voices that were demanding a year ago that the island enters an IMF programme were now saying that it did not need to go that route, based on its current level of reserves.

Minister of Finance Chris Sinckler

Minister of Finance Chris Sinckler

However, he was adamant that there would be no formal programme under his watch.

“We are not doing an IMF programme, we are doing a Barbados programme,” he stressed, while noting that the IMF had its view which it had expressed.

However, the Minister of Finance said the “fundamental fact was that what the IMF has on offer is not what the people [of Barbados] say they want and what we ourselves, from our analysis, say would make sense in Barbados.

“Ultimately, if you go to the IMF and you have a serious balance of payments crisis and you run out of reserves, you can secure a standby arrangement to ensure that you can pay your creditors and not default on debt and other balance of payments problems,” he said.

The other option was an extended fund facility, similar to Jamaica’s, which offers budget support.

However, Sinckler warned that to get it, “ you first have to get past the hawks on the IMF board who are saying that this country needs to devalue its currency or needs to go into as debt restructuring programme . . . If that is what Mr Arthur and other people in Barbados want, well then say so,” said Sinckler, warning that “we will get the IMF money at a low cost on the financial side, but there may be a higher and more devastating cost otherwise”.

6 Responses to IMF STICK

  1. Alex Alleyne December 25, 2014 at 1:18 am

    IMF want to put BDS under its thumb and wrap its fingers aroung our throats . Our leaders must continue to say NO .

  2. Deep A Byss
    Deep A Byss December 25, 2014 at 1:25 am

    Stay away from the IMF

  3. Tony Webster December 25, 2014 at 2:01 am

    Mr. Arthur is absolutely on-target. Our Government’s stance, is a very odd concoction of bravado, stubborn-ness, half-truths, opaqueness, and hanging-on-by-your-nails-syndrome. It resides carefully protected in their special Mission-Statement: “The Party; the present, and tomorrow is what is paramount. Do not worry about the future and what shall be left for our children to come…the future will take care of itself”. All in the name of political survival at all costs.
    It is also based on the ” principle”, (admittedly, validated just recently) , that a voting majority of Bajans are foolish; will believe anything they are told; and have short memories which can be “hacked” ( if not deleted) by last-minute “tactical adjustments” before polling-day.
    One more time: Mr. Arthur is right. This is no game of Snakes-and-Ladders (yes, I’m tempted to comment about snakes) …but quite simply… our country’s survival and future is at stake. Judging by what is now casually-disclosed of Cabinet proceedings, one also must recognise that governmental dysfunctionality…may now be added to the official list of Non-Communicable Diseases. Another “First” for our proud country.

  4. seagul December 25, 2014 at 9:50 am

    When a loan from the IMF is accepted it comes with conditions and they’re called austerity conditions, and the first people hurt are the people who receive federal salaries and the pensioners. It also means that subsidize business, whether by the government or energy supply—shut down, so unemployment rises. Generally speaking IMF and the world bank are parasitic institutions…

  5. Pluto Merick December 27, 2014 at 10:52 am

    To Alex Alleyne comment above… and observe saying NO will come to an end as soon as certain ‘pensions are secured’ from there on Heaven help us. It called we fat cats first syndrome.

  6. Carl Harper December 28, 2014 at 11:14 pm

    Can the IMF be any worse for Barbados than what Barbadians are currently experiencing under this DLP administration?


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