Government will be getting more help than it asked for as it moves to fix its major fiscal problems this year.
An International Monetary Fund (IMF) institution based here is planning to pursue new efforts to help Barbados and other Caribbean countries manage their finances over the next 12 months.
Last month, Minister of Finance Chris Sinckler announced that government had requested and received IMF approval for “technical assistance” in the “critical areas” of tax administration, and fiscal/ operational reform within key statutory which rely on central government for large transfers for their operations”.
It has also emerged that the Caribbean Technical Assistance Centre (CARTAC), one of eight such international centres started by the IMF, has detailed a 2014 work programme that includes a renewed focus on public financial management and fiscal concerns in Barbados and neighbouring islands.
CARTAC’s programme coordinator Dr Arnold McIntyre recently documented some of the schedule of the organization “created to help countries strengthen human and institutional capacity to design and implement sound macroeconomic policies that promote growth and reduce poverty”.
“In [public financial management], CARTAC will focus efforts on supporting countries with their [public financial management] reform agenda and action plans, ensuring a coordinated and sustained reform effort,” the official noted.
“Specifically, CARTAC is focusing on improving budget preparation processes and budget execution including strengthening capacity in cash flow management and forecasting; budget execution together with internal audit; and strengthening oversight and financial management of state-owned enterprises and containing contingent liabilities.”
McIntyre said such work would be done in the context of a global recession which “continues to affect the Caribbean territories and macroeconomic conditions continue to deteriorate in some countries with weak growth, worsening fiscal deficits, rising debt and increasing financing pressures”.
“Preserving stability and promoting growth are the medium-term priorities of our countries,” he said.
“Fiscal consolidation is the cornerstone of macroeconomic policy in most of the region’s economies and CARTAC has stepped up technical assistance support in this area to assist member countries. CARTAC’s [public financial management technical assistance] is assisting member countries in developing the capacity needed to support ambitious fiscal consolidation programmes.”
Delivering a ministerial statement on Government’s fiscal consolidation efforts in the House of Assembly last month, Sinckler said the request for technical assistance from the IMF’s Fiscal Affairs Department was the result of “deep concerns” about tax administration and funding of statutory corporations.
He said both areas were “key examples of parts of government’s operations which exhibit unacceptable levels of inefficiency and dis-functionality resulting in increasing financial burdens to the state”.
“I am happy to announce that the Fund has accepted the requests and starting next month, the first team will begin its examination of the fiscal and operational challenges of some of our key statutory entities,” Sinckler informed the Lower House.
“In anticipation of that and in an effort to advance and concretize this work, the Ministry of Finance will assemble a high level task force of senior finance, business and accounting experts to work along with the Fund’s team to finalize a reform agenda for the selected entities to be presented to the Minister before mid-year.
“I also anticipate that very shortly the Fund will identify a team of experts to conduct the long overdue comprehensive assessment of the direct and indirect tax systems in Barbados with a view to advising government on major reforms necessary in both tax policy and administration,” he added.
Meanwhile, McIntyre said in addition to public financial management, CARTAC’s continued focus was on “getting the basics right” in budget preparation and execution and increasingly internal auditing.
“CARTAC is maintaining its focus on the financial sector, particularly Basel II implementation and strengthening supervisory and regulatory frameworks in the non bank sector,” he said.
“Support to countries in implementing Basel II has been stepped up. In the nonbank sector, the focus will still be primarily on insurance and credit union supervision and the development of the nonbanking supervisory capacity in the [Eastern Caribbean Currency Union].
“In the financial sector, the work plan for 2014 continues to focus on the needs of the individual countries as well as the region. At the regional level continued support to the development of a regional financial stability report working with the Central Banks and the [Caribbean Centre for Money and Finance].
“In statistics, continued support to strengthening capacity in national accounts (emphasizing compilation of quarterly GDP statistics) and Prices together with targeted support to developing balance of payments statistics.”
