Would IMF programme make sense?

After the island’s latest sovereign credit ratings downgrade, most Barbadians are considering what is next for their country. If the prognosticators are to be believed, the options are grim.

The harshness of the options, however, could be directly correlated to the level of denial our government seems to be in about just how bad the economic reality has been for some time now.

Denial aside, one of the most whispered about options to save this rudderless economic ship is an International Monetary Fund (IMF) arrangement. The relationship between the IMF and countries in the region has long been fraught with issues, the chief being the ability of Caribbean states to maintain domestic policy space and economic sovereignty, while adhering to IMF conditionalities.

According to Kari Levitt in her Reclaiming Development: Independent Thought and the Caribbean Community , “The use of conditionality to impose economic policies or economic doctrines on borrowing countries, because these happen to be the prevailing views in Washington, has been a major source of conflict between lending agencies and borrowing countries” in so far as they are externally imposed and delegitimize home-grown efforts at stabilization.

The specifics of an IMF arrangement are generally standard. Countries are mandated to divest public entities, in some instances devalue the national currency and reduce spending all in an effort to stay afloat. However, such sacrifices can come at further costs since these programmes have a tendency to be harsh departures from domestic plans, setting aside comfort and ideology.

As a result, governments are hard pressed to convince electorates that this is the right medicine and, even more, that the contagion is not to be blamed entirely on their administrations, therefore making political loss a real consideration.

Of all the countries in the region, Jamaica has had the most experience with the IMF with arrangements dating back to 1962. The debt crisis from the 1970’s to 1990’s, could still lead to vibrant debates in Jamaica as to which of the political parties and, more to the point, which leaders are responsible for the dire situation the country found itself in.

Obviously, if Barbados ends up in the IMF’s hands, such a debate would be pointless given the fiscal fumbling of the current administration since it took office. Not to mention the solid ground they were left to play on when their predecessors were voted out of office. Assigning blame at any stage would, however, not be the most productive exercise for a country which clearly would have greater considerations to make.

The IMF, in its most recent report, characterized Barbados’ situation by stating, “The Executive Directors welcomed the pickup in economic growth led by the tourism sector and the improvement in the external position. At the same time, notwithstanding the authorities’ consolidation efforts, they noted that the large fiscal deficit and a further increase in public debt remain a challenge. They stressed that continued fiscal adjustment and public sector reforms are necessary to bring public debt on a downward path, preserve external sustainability, and improve investor sentiment. They also underscored the need to eliminate impediments to stronger long‑term growth and bolster competitiveness.”

Jamaica has had a more contemporary experience with the IMF, which the Fund and the Government have said is bearing some fruit. In May of 2013, Jamaica agreed to its latest IMF arrangement which expires in April of this year. However, the going has not always been easy in this most recent period.

A 2015 Jamaica Observer  report notes that after three consecutive quarters of economic growth, GDP fell by 1.4 per cent in the third quarter of 2014, and that the Jamaican economy is smaller today than it was in 2008. With anemic growth and continued austerity, social indicators have drastically worsened, with the poverty rate doubling since 2007. Unemployment, at 14.2 per cent, remains higher today than during the height of the global recession.

A few years on, inflation is still high. So too is the import bill, although declining. Consumer goods remain expensive and,  by and large, the average citizen has not felt the positive effects of the deal. 

The decision to enter into an IMF austerity programme  is never to be taken lightly for the reality of negotiating,  implementing and not reaping the just desserts or not reaping them with any haste is an all too common occurrence.

Additionally, given the seeming inability of the current administration to seal the best deals, it is doubtful that swallowing the bitter pill would do us any good still.

The Opposition Barbados Labour Party two weeks ago called on the Government to level with the people of the country to stop the drift. Of course, implicit in this call was  the notion that elections should also be called soon if not only because a constitutional date is approaching but also as an admission that they are ill-equipped to even attempt to lead any further.

The Barbados Labour Party, in its most recent press statement, indicated that it was ready for an election. What it must also ensure it is ready to do is to handle the crisis it has been describing. One thing is sure; calling an election does not stave off the imperative of looking to the Washington-based agency; to the extent, that it is an imperative.

It is hard not to notice that the ability to ascertain what are imperatives have been difficult, given the sporadic updates not to mention the outright denial by the Government about how bad things truly are.

Suffice it to say that there are no easy answers, but if we negate to ask the questions, the more difficult the resulting realities will be. And if there is one point of consensus, it should be that such would do us no good.

 (Andwele Boyce is a young communicator who is passionate about politics and popular culture. He holds a Master’s in international trade policy and is currently pursuing a law degree.)

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