Say ‘yes’ to IMF

. . . but on your terms, Govt told

With a team from the Washington-based International Monetary Fund (IMF) currently on island for talks with the Freundel Stuart-led administration, two retired permanent secretaries are calling on Government to bite the bullet and enter into a funding arrangement with the IMF.

However, William Layne and Frederick Forde are both cautioning that any such financing plan must be on Barbados’ terms only.

William Layne
Frederick Forde

The last time the economy was put into IMF hands back in the early 1990s, the bitter fiscal medicine that followed proved too strong for many Barbadians to stomach and was blamed for the eventual collapse of the then Erskine Sandiford-led administration, following crippling street protests.

Among the major expenditure cuts instituted then was an across-the-board eight per cent pay cut in the public sector, which was later restored.

However, with the economic and social fallout still fresh in its mind and a general election now looming, the ruling Democratic Labour Party (DLP), though faced with a deficit of six per cent of gross domestic product and dwindling foreign reserves which stood below the desired 12 weeks of import cover at just 8.6 weeks or $549.7 million at the end of September, is very reluctant to seek financial help from the Fund, even though the IMF publicly indicated at the end of its last Article 1V Consultation back in June that it “stands ready to assist the Government of Barbados, including through continued policy dialogue and technical assistance”.

But with the populace already reeling from a $542 million austerity package announced by Minister of Finance Chris Sinckler back in May with a view to closing the $537.5 million deficit, there are legitimate concerns that Barbadians simply cannot take any more austerity at this time, even if they may not have a choice in the matter.

Ahead of next year’s electoral deadline, the Opposition Barbados Labour Party has also been reluctant to commit Barbados to any IMF programme, especially since analysts suggest that it could fly in the face of the BLP’s immediate plans to reinstitute free tertiary education, to offer higher wage increases to public servants and to repeal the dreaded National Social Responsibility Levy, which was hiked from two to ten per cent back in July.

However, participating in an Institute of Chartered Accountants of Barbados-sponsored panel discussion here on Tuesday night, Layne, who is the former permanent secretary in the Ministry of Finance, suggested that an IMF programme would redound to greater fiscal discipline on the part of Government, since it would be required to follow the agreement to the letter.     

In fact, Layne argued that “Governments in the region only take action under an IMF programme.

“We just do not make difficult decisions in the Caribbean.

“So it is best if you have your own programme and you go to the IMF, then you have to pass tests,” he told the gathering at the Savannah Beach Resort, adding that “the type of decisions that have to be made will not be made by the Government of Barbados outside of an IMF programme”.

Layne cited Jamaica, Grenada and St Kitts and Nevis as regional territories that went to the IMF with their own terms and successfully ran economic recovery programmes.

“They did an IMF programme which was home-grown. They went to the Fund and said this is what we are supposed to do, could you give us funding, and they kept to it.”

He pointed out that St Kitts repaid the Fund “at least six months ahead of time because they were so successful in the programme.

“That’s the only way because you have to then meet the requirements of the Fund and the discipline,” the former top finance official said.

Forde, a former permanent secretary in the Ministry of Agriculture, while making it clear that he does not favour the IMF, expressed a belief that it was necessary for Barbados to go to the Fund now.

However, he warned that devaluation of the Barbados dollar must not be an option.

“I am not a big fan of IMF, but if you develop your own programme and you’re going to discuss with them your programme and get funding, there is no problem,” said Forde, who is also a former deputy auditor general.

“But don’t let them give us a programme,” he stressed. “We collaborated with them before in 1991 and basically we had a good collaboration.

“And you remember what the prime minister said [then], ‘no devaluation’.”

While acknowledging that he was not an economist, Forde said his position in support of maintaining the island’s 2-1 currency peg with the United States dollar, was for reasons of trade.

Suggesting that export oriented economies were the ones to benefit from devaluation, he suggested there was need for Barbados to protect its currency position.

“If you’re manufacturing and selling and getting foreign exchange from selling, then devalue,”

Forde said, while suggesting that it was not beyond Barbados to compile an economic recovery plan that is acceptable to the IMF.

“We sell ourselves short. We have sufficient capacity here in Barbados, by Barbadians that we can develop a proper programme for us and stick to it.”

“We have the capacity in Barbados if we are really serious to develop the type of programmes that we have to develop to get ourselves out of this rut.”

Forde said that another reason Barbados should develop its own plan was because when given the opportunity to devise a programme, IMF officials usually seek to impose plans which are likely not relevant to Barbadian needs.

“They come with a little plan, then milk you. They come with a template, and they want to stay here as long as possible because they love this place,” he added.

During this week’s visit, the IMF team, led by Judith Gold, is also expected to meet with Opposition and private sector stakeholders as part of its 2017 Article IV consultations.

19 Responses to Say ‘yes’ to IMF

  1. Steven Layne
    Steven Layne November 9, 2017 at 11:00 pm

    Why now,?

    Reply
  2. Head shots November 9, 2017 at 11:38 pm

    Hell no!! Once the IMF get there hands in the mix its downhill, the IMF will control Barbados economy and tell the government to conduct its business, Sanitation, transport board and other government entities will have to cut spending. ..

    Reply
    • Jennifer November 10, 2017 at 1:45 am

      Unless you did not realize, it is already going down the hill – all of that crime is also part of the down hill process. We are dealing with two ends of the same rope, and varying branches of the same tree, some natural and some grafted in.

      Reply
  3. Tony Webster November 10, 2017 at 12:13 am

    Cancer requires strong medical interventions, and pain, and worry. Consider the alternative: Chinese medicine?

    Reply
    • Jennifer November 10, 2017 at 1:35 am

      “They come with a little plan, then milk you” – no surprises here, after all if you can’t manage your own financial azz end they will manage it for you. We got lots of players and preyers here and knights. What is so sad, is that when these leaders make bad economic/financial decisions, they don’t live to reap the fruits of them, it is usually our children and grand children that eat them fruits. At least we can have some assurance knowing that which ever way the pendulum swings its all continuing down hill, from here.

      @Tony Webster – Oh yes that cancer>>>>>>>>> we got a lot of that in this place in varying types and stages, – aggressive, passive, malignant, submissive, benign, stage 1, 2, 2.5. 3.5, what a disease to deal with.

      Reply
  4. hcalndre November 10, 2017 at 1:23 am

    @Head Shots; I don`t know if they should or should not. Why would barbados be different from the other islands that were mention in the article that went to the IMF and had a successful recovery. How can you say they will cut the spending on the Sanitation and Transport Bus Service? If you are saying that money is spent on those two and the services are so ridiculous then where have the money gone? If the PM knew what it took to be a leader, the country would not be where it is today, his cabinet knew that from jump street that he was a failure, you remember the “Eager 11” they knew that he never had a clue but had a change of mind after he spoke with them, they decided to stick with him, take care of themselves and forget the country and here is the result.

    Reply
  5. Saga Boy November 10, 2017 at 4:46 am

    Layne wants Barbados for the BLP. If we go to the IMF thousands of employees from Central Gov as well as statutory Corporations will have to go home. With cooperation from the private sector and unions we can weather this storm. Unfortunately these two sectors are not in bed together. Look out for more disruptions by unions in the coming weeks before independence.

    Reply
  6. Saga Boy November 10, 2017 at 4:51 am

    How come Layne does not talk about an examination of the business models being adopted by the private sector that is the main source of foreign currency leakage?

    Reply
  7. harry turnover November 10, 2017 at 6:30 am

    DEM would not go to the IMF AT THIS TIME because they WILL have to account for EVERY CENT spent,lost or stolen..
    Won’t be surprise though if they do go and call elections soon after knowing that they are going to lose the election anyhow.

    Reply
    • Jennifer November 10, 2017 at 6:49 am

      I take it you are agreeing with this IMF move, but the bEE will be in the same position when them go to the IMF as they will have to account for every expenditure connected to dem. So how will they do it??? One thing for SURE, regardless of which party goes to the IMF the only people who will be grinning and bearing is poor black people, and they will still be spending to keep up the greedy hog. In my book all goods and services with the lowest cost I will be using, all of we cutting back.

      Reply
  8. Mark Adamson November 10, 2017 at 6:38 am

    Three things here:

    1) “The last time the economy was put into IMF hands back in the early 1990s, the bitter fiscal medicine that followed proved too strong for many Barbadians to stomach and was blamed for the eventual collapse of the then Erskine Sandiford-led administration, following crippling street protests”.

    That is a very egregiously wrong statement. Why is Barbados Today often so wrong in many of its conclusions?? The collapse of the Sandiford Administration had nothing to do with any crippling streets protests – which though had long before taken place in 1991. Such wrongful attempts at distorting history!!

    The collapse had to do with a successful motion of no confidence
    brought by Owen Arthur and Sandiford calling election in 1994. And the major theme running through the no confidence debate
    was the adamancy and dictatorial attitude of Sandiford in getting
    Tony Arthur appointed to head the BTA, so much so that in a
    nationally televized event Sandiford accused Wes Hall, Evelyn
    Greaves, Keith Simmons of being diametrically opposed to
    Arthur’s appointment, and with that the worsening of the
    relationship between those Ministers and himself. It was for some
    while reported by various people that various meetings had been
    long taking place between various groups opposed to the then
    prime minister and on how to get the rid of him and the DLP
    government. So, that Arthur fully aware of some of these
    meetings and that those Ministers were so taken aback by
    Sandiford’s accusation on national TV was able then to get the
    votes of those three former Ministers and Independent Leroy Trotman. The result was 14 to 13, with Delisle Bradshaw of the BLP having been the only constituency delegate
    in the House of Assenbly NOT present at the historic vote. The
    IMF and the structural adjustment and stabilization program that the government of Barbados and the IMF had agreed upon had nothing to do with the collapse of the Sandiford government. Sandiford had simply lost the confidence of the majority of members of constituency delegates of the House of Assembly.

    2) Barbados – at this stage – needs a new model of development, a new model of governance and a new model of institutional finance. The Barbados government does not need the IMF!! The IMF does not EVER come up with or guarantee such models. The current models of those categories have been proven to have been very flawed and bankrupt and have therefore failed and
    floundered miserably.

    3) There must be the Abolition of All so-called Exchange Rates with the so-called Barbados Dollar. By tying endless financial transactions between the relevant people to the rate of 2 Barbados $ to 1 US $, and 2 Barbados credits to 1 US $ credits, have long outlived their usefulness and have become total financial policy failures. It is these so-called parity rates – that when effected – that are the equivalent of local TAXATION on the receipts of Barbadians and foreigners importing of goods and services in the context of the same financial arrangements . As a matter of truth, they are TAXATION. As TAXATION, they are part of the source of the deep seated fundamental political financial problems facing this country. All it simply takes when these so-called Exchange rates are ABOLISHED are for locals and foreigners to accept the currencies or credits that the financial transactions are denominated in in the
    wider comnercial transactions that they are involved in. Say, a
    Barbadian exporter is sending 5 bales of sugar to the US he or she
    simply would have to get the equivalent of the financial amount,
    say, 1000 Barbados $, that would be got by persons from the
    other persons receiving the 5 bales here in Barbados, from a National Currency Board who would receive the amount in foreign credits, 400 US credits, from the overseas receivers of the 5 bales of the sugarThree things here:

    1) “The last time the economy was put into IMF hands back in the early 1990s, the bitter fiscal medicine that followed proved too strong for many Barbadians to stomach and was blamed for the eventual collapse of the then Erskine Sandiford-led administration, following crippling street protests”.

    That is a very egregiously wrong statement. Why is Barbados Today often so wrong in many of its conclusions?? The collapse of the Sandiford Administration had nothing to do with any crippling streets protests – which though had long before taken place in 1991. Such wrongful attempts at distorting history!!

    The collapse had to do with a successful motion of no confidence
    brought by Owen Arthur and Sandiford calling election in 1994. And the major theme running through the no confidence debate
    was the adamancy and dictatorial attitude of Sandiford in getting
    Tony Arthur appointed to head the BTA, so much so that in a
    nationally televized event Sandiford accused Wes Hall, Evelyn
    Greaves, Keith Simmons of being diametrically opposed to
    Arthur’s appointment, and with that the worsening of the
    relationship between those Ministers and himself. It was for some
    while reported by various people that various meetings had been
    long taking place between various groups opposed to the then
    prime minister and on how to get the rid of him and the DLP
    government. So, that Arthur fully aware of some of these
    meetings and that those Ministers were so taken aback by
    Sandiford’s accusation on national TV was able then to get the
    votes of those three former Ministers and Independent Leroy Trotman. The result was 14 to 13, with Delisle Bradshaw of the BLP having been the only constituency delegate
    in the House of Assenbly NOT present at the historic vote. The
    IMF and the structural adjustment and stabilization program that the government of Barbados and the IMF had agreed upon had nothing to do with the collapse of the Sandiford government. Sandiford had simply lost the confidence of the majority of members of constituency delegates of the House of Assembly.

    2) Barbados – at this stage – needs a new model of development, a new model of governance and a new model of institutional finance. The Barbados government does not need the IMF!! The IMF does not EVER come up with or guarantee such models. The current models of those categories have been proven to have been very flawed and bankrupt and have therefore failed and
    floundered miserably.

    3) There must be the Abolition of All so-called Exchange Rates with the so-called Barbados Dollar. By tying endless financial transactions between the relevant people to the rate of 2 Barbados $ to 1 US $, and 2 Barbados $ credits to 1 US $ credits, have long outlived their usefulness and have become total financial policy failures. It is these so-called parity rates – that when effected – that are the equivalent of TAXATION. As a matter of truth, they are TAXATION. As TAXATION, they are part of the source of the deep seated fundamental political financial
    problems facing this country. All it simply takes when these so-called Exchange rates are ABOLISHED are for locals and foreigners to accept the currencies or credits that the financial transactions are denominated in in the wider comnercial transactions that they are involved in. Say, a Barbadian exporter is sending 5 bales of sugar to the US he or she simply would have to get the equivalent of the financial amount, say, 1000 Barbados $, that would be got by persons from the other persons receiving the 5 bales here in Barbados, from a National Currency Board who would receive the amount in foreign credits, 400 US credits, from the overseas receivers of the 5 bales of the sugar.

    So, there you go.

    Reply
  9. archy perch November 10, 2017 at 7:52 am

    Wait Layne is the same guy that was inefficient when in government in dah big job he had, and now advising government wah to do??????SMH. He cares nothing about his grand children’s future.

    Reply
  10. Solutions Barbados November 10, 2017 at 8:19 am

    There is absolutely no need to go to the IMF for more bitter medicine austerity measures. This country is under enough austerity already with the current tax policies. There is another way, and it is called tax reform. We must change our tax system so as to ensure that all citizens and businesses contribute to it fairly. We also need to stamp out corruption, which is also a huge burden on this country’s finances. There are also other sources of low interest financing besides the IMF. But more borrowing is not the answer either.

    Reply
    • Jennifer November 10, 2017 at 10:19 am

      Well said – starting with that non – collecting VAT. While we are at it, there seriously needs to be a revamping of the educational, political, and religious phenomenons our past leaders have helped to set up in this place. And if any government potential or otherwise cannot see that there is a problem, need not apply because you will automatically become part of the overall continuing problem to this people.

      Reply
  11. Greengiant November 10, 2017 at 9:00 am

    Yes the same Layne that advised the Arthur administration on the Clico situation, and rather than resign and go public with a message to the same public who paid his wages. Kept silent, drew his salary, then retired to become a consultant.

    Has a lot of mouth now strangely. As we know, “a year in politics is a very long day”. Criticize the government, as they do what they deem best. I don’t agree with everything they do, or how they do it. We didn’t agree with Sandi either, only for those who castigated him politically to later admit, the medicine, though bitter healed the nation’s ailment. The medicine was so effective in the short term that many nations are now consuming similar economic medicines.

    So by now we should understand that these two parties will tell you anything now to win an election. Then once in office they will sing a completely different tune. Let them both battle to be the main opposition.

    Reply
  12. Milli Watt November 10, 2017 at 11:46 am

    a conscience is a burden………so much so you got to sit down and talk.

    Reply
  13. Susieq November 10, 2017 at 1:37 pm

    Go to the IMF/don’t go to the IMF – pick your poison. Whichever psth is choosen it will be biiter gall.

    Reply
  14. Susieq November 10, 2017 at 1:41 pm

    Go to the IMF/don’t go to the IMF – pick your poison. Whichever path is choosen it will be biiter gall.

    Reply
  15. Sheron Inniss November 10, 2017 at 3:07 pm

    Say no to IMF as we no longer have bargaining power. Even if we did I would say NO WAY.

    Reply

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