IMF complaint

Politics getting in the way of growth, says Lagarde

If Barbados or any other Caribbean country wants examples of “well-designed fiscal rules” that have helped to guide consolidation efforts it should look no further than Grenada, Jamaica or St Kitts and Nevis, the head of the International Monetary Fund (IMF) has suggested.

In a hard hitting address today at the 2017 High Level Caribbean Forum, Christine Lagarde tore into Caribbean leaders for allowing “politics and electoral cycles” to get in the way of fiscal adjustment programmes designed to grow their economies.

“Politics and electoral cycles can have a strong impact on fiscal policies and economic outcomes – a phenomenon that has been observed around the world, and has also played a major role in shaping economic developments in the Caribbean,” she told the one-day forum in Jamaica, themed, Unleashing Growth and Strengthening Resilience.

Christine Lagarde
IMF Chief Christine Lagarde in conversation with Jamaica’s prime minister Andrew Holness during today’s High Level Caribbean Forum.

“Too often, promising reforms have been cut short by policy reversals driven by political pressures. Not in all cases I have to say, but in many instances. So we need strong institutions and fiscal frameworks that can help safeguard and sustain prudent fiscal policy over time,” the IMF’s managing director said, while pointing to Grenada, Jamaica and St Kitts and Nevis as countries where “well-designed fiscal rules” have helped to guide consolidation efforts.

“The experience of these countries, which has been very successful, can provide a good example for other countries in the region,” she added.

Lagarde did not single out any country for criticism, preferring to address the issue broadly.

However, the Freundel Start administration has been under increasing pressure from top economists and the private sector to turn to the IMF for help to reverse the worrying slide in foreign exchange reserves and close the over $340 million deficit.

Several homegrown programmes have failed to achieve the desired goal, but Government has steadfastly refused to go the IMF route.

A medium-term fiscal strategy introduced several years ago, with no oversight committee, was subsequently abandoned, with Minister of Finance Chris Sinckler announcing in May that a new Barbados Sustainable Recovery Plan would be implemented by the end of this year.

The new plan, structured and developed by three working groups that came out of a meeting in August of the Social Partnership, is meant to address the areas of foreign exchange earnings, competitiveness, and the major challenges associated with implementation, and will include the establishment of an oversight committee, Sinckler said.

Lagarde today promoted the formation of fiscal councils “as tools to promote sound fiscal policies by providing independent information and analysis, and by monitoring compliance with fiscal rules.

“Well-designed institutions can play a key role in securing broad political consensus around important reforms,” she insisted.

The IMF boss complained that several Caribbean countries have been recording low economic growth for decades, which she said has led to social problems, including crime and youth unemployment.

And while she said some leaders had been making an effort to grow their economies, it was “a bit of a puzzle” why growth remains stagnant.

“Unfortunately, economic growth in the Caribbean has been low for several decades. This has led to rising social and economic challenges including poverty, inequality, unemployment, and crime. While many authorities in the region have made the effort in terms of macroeconomic stability, in terms of fiscal efforts, yet growth is somehow resisting those efforts and it is actually a bit of a puzzle as to why that is,” she told the gathering, which included Acting Central Bank Governor Cleviston Haynes, the Barbados-based Caribbean Development Bank’s economist Dr Justin Ram, several former and present regional leaders and other high level officials.

Still, the international lending agency’s head identified several reasons, some of which she said were avoidable.

She listed external shocks, such as natural disasters and loss of international trade preferences, and “structural impediments”.

A few come to mind: the high cost of electricity, limited access to credit for households and medium and small enterprises, high rates of violent crime, and a persistent outflow of highly-skilled workers – the brain-drain,” she explained.

During the one-day conference IMF and regional officials discussed a range of issues affecting sustainable economic development in the Caribbean, including climate change, crime and violence and youth unemployment, and how to work more closely to improve economic growth and create more job opportunities. marlonmadden@barbadostoday.bb

33 Responses to IMF complaint

  1. Antonio Franklyn
    Antonio Franklyn November 17, 2017 at 1:06 am

    “well designed fiscal rules” Hmmm..lets examine the exchange rate shall we? Jamaican dollar is equal to 0.0079USD. East Caribbean dollar is equal to 0.37USD. So please explain to me how again going to the IMF will profit Barbados again whose currency probably has the highest exchange rate in the caribbean?

    Reply
    • Richard Johnston November 17, 2017 at 7:45 am

      The exchange rate is arbitrary and has nothing to do with economic growth or prosperity. The Japanese yen is worth less than 1 US cent.

      Reply
      • tedd November 17, 2017 at 10:43 am

        thus the phrase not worth a yen

        Reply
        • Richard Johnston November 17, 2017 at 11:34 am

          I had a yen to point it out.

          Reply
  2. bajan at large November 17, 2017 at 1:44 am

    What happens when someone in debt, borrows money to pay it off, you tell me. Now since Barbados is not on that short list, then you know where it is.

    Reply
    • Leroy November 17, 2017 at 6:06 am

      Debt in itself is not as bad as you think.
      Debt can be good or bad, its the reasons and management.
      Her comment about puttung politics before good economic planning is spot on for bds.

      If bds has to meet debt obligations of usd $500 mil annually and it can be reduced by half giving the economy breathing room for investment in the right areas then debt is a good thing.

      Whst she didnt directly say obviously bc she is not a politician was that some governments have to go for a country to realise better management.

      Reply
  3. Bajan boy November 17, 2017 at 3:05 am

    Wonder if Freundel and Chris realize s he talking bout DEM..

    Reply
  4. Tony Webster November 17, 2017 at 3:13 am

    Jus’ in case a li’l translation is needed:
    ” Effin yuh cyan hear…yuh gine feel”

    Reply
  5. Saga Boy November 17, 2017 at 4:04 am

    Well designed fiscal rules eh? Unemployment has been high in all three of those countries for many many years as a result of said policies. Same IMF lauded St.Kitts for their citizens by invitation program which was responsible for their 3.4 GDP growth. Is that what we want?

    Reply
    • Richard Johnston November 17, 2017 at 10:15 am

      Then ignore her.

      Reply
  6. Keen Observer November 17, 2017 at 4:27 am

    The reason for UWI is for economist to come up with solutions to economic problems not to delegate that to IMF.

    Reply
  7. Jennifer November 17, 2017 at 4:28 am

    Now this is how you know that we have some sick, wheelie bin people on board. Why was reparations talk not on this list of topics????? And don’t tell me it was not the time or place, that was perfect timing – the bull was in the room. You let a people who have exploited this Caribbean peoples over several years and built up their economies/reserves fierce and strong and left us in a hole of despair and now come and stand and talk iiiitttttt, to gather a further neck hold on this people. And I am not even going to bother to talk about these so called leaders in this country.

    Reply
  8. Greengiant November 17, 2017 at 6:48 am

    @Jennifer: Reparations has nothing to do with the IMF. These proposals / discussions (reparations) should be taken to the meeting of Commonwealth ministers, or be done through our many overseas associations based in commonwealth countries.

    The only purpose our Barbadian nationals serve is to lick the commonwealth’s ……….. while existing there, and then return home to criticize everything we do here.

    Our nationals ( my mother, and older siblings included), who migrated to the developed commonwealth countries after the second world war, are the ones through their children to drive the issue for reparations based on the suffering of their ancestors economically. I’ll bet that the African, French and Dutch nations will get the jump on us with this.

    Reply
  9. Sheron Inniss November 17, 2017 at 7:06 am

    She want notice.

    Reply
  10. Tee White November 17, 2017 at 7:16 am

    @Greengiant Jennifer is absolutely right and the IMF has everything to do with reparations. The IMF was set up by the colonial plunderers at the end of World War 2 as an economic policeman to keep the oppressed in their place. There is no such thing as neutral management of an economy. The managerment of an economy depends on whose interests the economy is intended to serve. The IMF is there to ensure that the Caribbean economies continue to serve foreign powers and economic interests while leaving Caribbean governments in increasingly desperate straits that we end up selling whatever we can lay our hands on to thehighest foreign bidder. Now it’s passports, with the approval of the said IMF. How long will it be before it’s our people again? Bajans need to make ourselves informed about every aspect of our economy so we, as citizens, can put forward proposals that serve our own interests as to what we need to do.

    Reply
    • Richard Johnston November 17, 2017 at 7:46 am

      Then ignore what she says.

      Reply
    • Jennifer November 17, 2017 at 8:15 am

      Ok Tee White. I tell you we have serious issues here, first with self. And we really need to stop these azz and boot licking practices. HOW do U PEOPLE THINK THEY GOT THEIR FEDERAL RESERVES, banks of ENGLAND etc AND WORLD BANKS. To then turn round and lend you all sheep money. You people need to revisit the wealth accumulation history of these people. You people still cannot see the choke hold.

      Reply
  11. Eddy Murray
    Eddy Murray November 17, 2017 at 7:32 am

    That should be you.

    Reply
  12. archy perch November 17, 2017 at 7:33 am

    Ya see. instead of steering our energies towards pulling this island out of the economic/financial situation. we spend our time battling one another, to bring down a government, and to make sure that everything it initiates fails. We ignore the fact that we all live on the same ROCK. There is much I can say about this but not now.
    Our leaders in the Caribbean, political and otherwise, need to seek debt forgiveness for our region instead of the useless reparations bull massive. The major countries Britain, France etc, all have their problems and the Brexit crisis to deal with, we are but little bed bugs. The big fellas control the major financial lending institutions and are able to grant our wish, but we must pursue it vigorously as one group. We will then have a clean slate if debt forgiveness if achieved.

    Reply
  13. Carson C Cadogan November 17, 2017 at 7:37 am

    Somehow she has failed to mention that Jamaica has been in the iron grip of the IMF for close to 40 years now, with no sign of getting out any time soon.

    The IMF has wrecked the Jamaica economy. Youth unemployment in Jamaica stands at 27.5 per cent. Jamaica’s growth rate is 0.5%. Jamaica$126.62 to one US dollar.

    This is what the PM of Jamaica said, “”The prime minister said some of the challenges include high public debt, vulnerability to natural disasters and external shocks, high energy cost/security, and migration of highly skilled workers.””

    She had nothing to say on these matters at all.

    Reply
  14. Katherine Zettler
    Katherine Zettler November 17, 2017 at 7:58 am

    simple really..do not tax local businesses to death.

    Reply
    • Carson C Cadogan November 17, 2017 at 12:48 pm

      Local businesses owe the Govt. more than $640million in unpaid taxes, duties, rents.

      That don’t sound like taxing business to death. Plus the Barbados Turf Club owes Govt. almost $20million in taxes it wont pay and this is going back almost a decade.

      Reply
  15. seagul November 17, 2017 at 7:59 am

    That “white witch”, aptly described and somewhat tragically explored by Barbadian author Timothy Callender in his 1980s script on the cocaine culture in Barbados and the Caribbean, has been a pernicious intruder into our islands for decades. Its importation, distribution, and usage have enriched a few, corrupted plenty, and destroyed many. The drug culture has brought with it blazing guns, bloody streets and fatherless children. But that is just one side of this country….that white witch!!

    Reply
  16. Ralph W Talma November 17, 2017 at 8:10 am

    Those in power should do whatever is necessary in order not to go cap in hand to the IMF. Have they tried seeking aid from the UK International Development Fund. Ask and ye shall receive!

    Reply
    • Belfast November 17, 2017 at 10:01 pm

      We could always, like the Minister of Water, go cap in hand to the Middle East for a handout.
      Another sleeping giant has woken up.

      Reply
  17. seagul November 17, 2017 at 8:10 am

    We can’t say anything detrimental or harsh against the IMF on this forum. Here we go again begging.

    Reply
  18. Arthur Collymore
    Arthur Collymore November 17, 2017 at 8:16 am

    Fools continue to comment negatively on Barbados going to the IMF for help. The example of citing the value of the Jam $ is a lame excuse for not doing the only feasible thing left to do. Did St Kitts, Nevis or Grenada devalued their currencies? No, yet their economies are on the rebound. Meanwhile, we in Barbados continue to slide into the duldrums. No wonder the islanders laughing at we. Some, like DEM govt, in their ignorance, are acting like real RHs.

    Reply
    • Antonio Franklyn
      Antonio Franklyn November 17, 2017 at 11:29 am

      Legalizing weed is also something we should do. Look at all the effects of weed legalization in countries that legalized it. Created jobs, economic growth, slowed down drug trafficking. And not to mention it actually treats/cures illnesses alot better than any pharmaceutical drug can. Now why look at all the upsides legalizing weed can have, and ignore that and go to an organisation that only agrees to help you if you make a few changes that the citizens themselves wont know about.

      Reply
    • Gearbox1964 November 17, 2017 at 11:34 am

      Yep…fools don’t understand that economic strength doesn’t depend on how the local currency is valued against the US currency.

      Reply
  19. Harry November 17, 2017 at 9:34 am

    In reality our Govt has lost its way, if you impose the level of tax that has imposed by this Govt reducing takehome pay when how can the economy rebound if people have less money to spend?

    Reply
  20. Sherlene Phillips
    Sherlene Phillips November 17, 2017 at 12:22 pm

    IMF is the last and worst resort…Them trying to rob the Caribbean. We need to cut down all the impirting and work together as a team…otherwise what is the point of Caricom

    Reply
  21. Patenham November 17, 2017 at 5:56 pm

    Who helped Jamaica, Grenada and St. Kitts with ” The Well Designed Fiscal Rules”?

    He’s a bajan.

    Reply
  22. Jane Burnett
    Jane Burnett November 17, 2017 at 6:59 pm

    Stealing mismanagement and reckless spending bad decisions no investors have the island in the state that it is in. No IMF.

    Reply

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