Robinson: Beware the IMF

A top University of the West Indies (UWI) economist is warning that an International Monetary Fund (IMF) solution may be just as painful for Barbadians to bear as the austerity measures announced in Government’s recent Budget.

“I do not think we should have any illusions because I think the homegrown programme is a very tough package and it has a lot of pain. However, I think an IMF programme would have been equally painful,” warned Justin Robinson, who is the dean of the Faculty of Social Sciences at the UWI’s Cave Hill Campus.

In response to recent calls for Government to go the IMF route, Robinson further suggested that the $542 million austerity package announced by Minister of Finance Chris Sinckler on May 30, would be just as hard to swallow as any IMF package.

“I think the two packages would be about the same size. What might differ is the mix of measures,” said Robinson, who was speaking on state-run CBC Radio today.

His view is totally at odds with that presented by former Prime Minister Owen Arthur and other leading economists who have suggested that the IMF solution may be the best one for Barbados right now and may actually be easier for Barbadians to bear.

In fact, Arthur has gone as far as to suggest that what Sinckler plans to subject Barbadians to in nine months by way of increased taxation, could have been achieved over the course of a three year IMF programme that would have given Government access to the equivalent of $310 million annually.

“The adjustment that the minister is bringing to the House is going to inflict about $250 million more pain on this economy than if the Government of Barbados had chosen to enter a programme with the International Monetary Fund,” Arthur said during the recent Budget debate, while warning that Government’s alternative of seeking a homegrown remedy did not match up to the IMF solution based on the country’s “seven-fold problems”.

However, Robinson, who is the chairman of the National Insurance Scheme and also a member of the board of the Central Bank of Barbados, argued today that while an IMF programme would have its benefits, Government might have been forced to make a number of major cuts to social services.

He also suggested that significant cuts would have to be made in terms of transfers to the institutions, such as the Queen Elizabeth Hospital, the UWI, the Barbados Tourism Marketing Inc, the Barbados Tourism Product Authority, the Sanitation Service Authority and Solid Waste Management and the Barbados Agricultural Development and Marketing Corporation.

The respected academic also pointed out that there were many unfunded pensions in the public sector which were escalating.

Just last week the IMF said it stood ready and willing to come to Barbados’ rescue, while warning that economic growth in 2017 would slow to less than one per cent, down from 1.6 per cent last year, reflecting the fiscal consolidation efforts introduced in the 2017/18 Budget.

Following its recent visit to the island, the IMF also cautioned last week that domestic inflation, which stood at 3.2 per at the end of last year, was likely to accelerate to 6.7 per cent by the end of 2017 as a direct result of the austerity measures in the May 30 Budget, in which Sinckler announced that the National Social Responsibility Levy would be increased from two per cent to ten per cent and that a two per cent levy would be introduced on all foreign exchange transactions.

Without passing judgment on the Budget itself or getting into the recent national discussion over whether or not the island should enter into a formal IMF arrangement, the lending institution made it clear the island’s economic problems were not over by any measure.

In this context, it said it “stands ready to assist the Government of Barbados, including through continued policy dialogue and technical assistance”.

However, responding to the latest assessment, Robinson said while he took comfort in the IMF’s suggestion that Government had finally started to confront the country’s financial problems head-on, its prediction that inflation will more than double was concerning. 

7 Responses to Robinson: Beware the IMF

  1. Arthur Collymore
    Arthur Collymore July 3, 2017 at 11:15 pm

    We have had 9 years of failed DLP home-grown policies & instead of getting better, the fiscal & monetary conditions have worstened. We would not had feared any worst had we gone the route of the IMF years ago. I contend that the country’s macroeconomic fundamentals would have improved sufficiently that we would now be enjoying sustainable growth. We have been called upon; years after year, to dig a little deeper, tightened the belt real tight, make more sacrifices so as to see light at the end of the tunnel that doth not yet appear. Which is preferable, suffering pain under a successful IMF programme or continue to suffer at the hands of an incompetent DLP admin with no end of suffering in sight? This is not even a trick question.

    Reply
  2. Epaphras D. Williams
    Epaphras D. Williams July 3, 2017 at 11:23 pm

    I’m tired of the long talk. There are ways to prove things.. show us the numbers. The Nation published one side of the story, now someone else needs to publish the other side of the story. Where is the money from the nine year long austerity programme going?

    Reply
    • Rechelle July 4, 2017 at 6:34 am

      Into an abyss.

      Reply
  3. Tony Webster July 4, 2017 at 7:46 am

    Last evening’s TV-8 take of of the professor’s speech, essentially was nonsensical: ” …an I.M.F. Solution could be as painful as a home- grown one, or perhaps more painful”. Evidently, it was very, very carefully extracted from his speech, not to edify, but to confuse. The average Joe would have asked, could we not chat with the Invading Menacing Friends; hear what they propose….and then decide? It boggles the mind, that CBC has such a low regard for the intelligence, the vaunted common-sense of us all. Wouldst that the Professor might enough to disassociate himself from the CBC summary, or at least clarify, lest he be cast into the pit where yard-fowls gather?

    Reply
  4. Greengiant July 4, 2017 at 8:17 am

    The reality is the IMF medicine will be more painful than any austerity implemented by any of our political parties. Their main criteria is a reduction of employees in the public sector, and a reduction in the social services financed by the state. Can the nation aford to do this when we have a group of people called the poor? We will simply have dead men, women and children walking with the introduction of any IMF recommendations.

    Reply
  5. Calloutlies July 4, 2017 at 8:32 am

    Justin, you are trying really hard to help your boy Chris. You really have to lean on the side of a budget that you more than likely had a hand in.

    Reply
  6. Ann Thomas July 4, 2017 at 12:25 pm

    Dr. Robinson, nothing could be more painful that what Barbadians are bearing right now under this Government. Let us get that clear.

    If we accept your thesis that an IMF programme would be just as painful, it is ONLY because this Government waited too late to go to the IMF. This particular Government went out of its way to make the IMF a bad word in this country and were bent on not repeating what they consider to be the mistake of the Sandiford administration. They present a picture of an IMF of the 80s and early 90s when one sized was used to fit all. They are fully aware that the IMF no longer operates like that and that there are at least two success stories with the IMF in recent times in the Caribbean – Grenada and St. Kitts.

    So, once again, Barbados suffers because of incompetence, bad policy choices and failure to take good advice in a timely manner.

    By the way, please enlighten the Barbadian public as to your experience with the IMF. It might be time for you to go and advise the Government of St. Vincent and the Grenadines

    Reply

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