We end the year noting that our country is finally and fully under the economic control of the International Monetary Fund (IMF).
It seems strange to me that what would be a badge of shame for the Barbados Labour Party was exhibited almost with pride by the incumbent Democratic Labour Party. I refer to the photo op featuring the leader of the visiting IMF staff team with the Minister of Finance and the Governor of the Central Bank.
I had the impression of an errant schoolmaster and errant head boy after a meeting with the head teacher.
The photo was accompanied by a story outlining what must surely be only phase one of the restructuring of the Barbados economy along standard IMF principles of retrenchment and austerity.
Why would these two top officials not mind being seen in the company of the IMF, which they asked not to visit the island a year ago when we were coincidentally about to go into a General Election? Because their own policies having failed completely they can now say to the people they are doing direct economic harm to, well, it is not us, it is the IMF.
‘Conditionalities’
The fund is accustomed to this, of course, and is comfortable taking the blame for the “conditionalities” it imposes on errant economies which won’t take measures in small doses over several years to create a more efficient Government and a transparent investment climate.
So after five years of Dems’ rule, we have a bloated Government (even compared to what we had before, so you can imagine) and an investment climate so markedly unappetizing that the only way we can get new money to come in is to give the economic equivalent of bolting a cruise ship onto the side of the island, paying no taxes or import duties, while landlubber competitors in the same businesses get to subsidize them.
As we approach the year-end, we are hearing proposals coming from the National Union of Public Workers (NUPW), the union representing most of the affected workers, about a three per cent pay cut, voluntarily taken in order to keep everyone employed, and other very creative measures.
I wonder why such measures were not made public last June at the national economic forum held by the Government.
Doesn’t the NUPW and the Barbados Workers’ Union’s Sir Roy Trotman, who both still seem to think that they are negotiating with Messrs Sinckler and Stuart, realize that they are not? That the latter are now just the rapporteurs, if you will, between the stakeholders and the IMF, should they choose to even listen?
Have we forgotten that the only way we got that Credit Suisse loan to bridge us over a few months was to agree to attach a copy of the IMF staff report and our agreement to everything it says to do?
As you know, since I always find a way to repeat it here, my favourite joke is the one about how today’s airplanes are so automated that they only need to have one pilot and a dog in the cabin.
Punch line: the dog is there to bite the pilot if he tries to touch anything. So it is with Barbados. Our economy is now on IMF autopilot, and everything you hear the government announce, starting with Mr Sinckler’s “Black Friday” announcement in the House of Assembly, must be in line with the IMF’s prescription for the economy.
Their Rx is necessary but it has to be balanced with revenue-generating measures. Where are they?
And why did I ask that question when it has been clear from forever that this administration only knows how to hand out jobs, not how to take them back, and how to spend money on all sorts of projects without any credible plan for increasing the foreign exchange-earning capacity of the country.
The correction to our economy which starts in a couple of weeks, will be like the United States’ sequester. It is going to cut the good and the bad equally in a last-ditch attempt to reduce Government spending.
It has been so bad that the only bipartisan legislation voted into law by the congress in the past year or two was one to mitigate the effects of the sequester to make it less harmful in its wide sweep.
Barbados thus leaves the year 2013 quietly but firmly in the hands of the IMF as it makes a last ditch effort of its own – to save its parity with the US dollar.
Noteworthy:
It seemed fitting, somehow, that the notice should have been published in fine print. Oh, I am sure this was just how it goes when you are rushing to get something in the paper and you just rip it from the printer or make a PDF and get it over to Fontabelle.
But in this case it seemed fitting because it was about, well, missing the fine print. Or not noticing something was amiss somewhere.
The cost of that error of omission on the part of Cave Shepherd & Co., one of Barbados’ longest standing and still finest companies (nope, you couldn’t pay me to say that), turns out to be $2.5 million. US dollars. Plus another Bds$11 million in write-offs in goodwill and initial investment.
If you don’t know what I am talking about, check out the “Press Statement” from the company on Page 33 of last Friday’s Weekend Nation. It is about DGM Bank and Trust, a company in which Cave Shepherd invested back in 2008, apparently unaware of any trouble looming beyond the horizon.
Afterwards, according to the statement, “a substantial discrepancy in the valuation of two money market assets administered by DGM was identified”. However, no “fraud” or “malfeasance” has to date been discovered and “it appears that the difference resulted from erroneous calculations of asset values”.
What a difference a few zeros can make. For example, if you had a piece of land worth, say, $150 000 and you erroneously kept your finger on the keyboard for a second too long, it could show up as $15 000 000 on the asset side of your balance sheet.
See? Could happen to anybody.