Economically speaking, there are probably few words more dreaded in Barbados than International Monetary Fund (IMF).
The Washington-based financial institution has developed into a “bogeyman” for small vulnerable economies like Barbados and others in the region, especially as it relates to the various policy recommendations and austerity-type programmes it usually recommends and helps to impose.
For the last five years Barbados has been trying to resolve its major fiscal problem and to get the economy to grow again. Increasingly, questions are being raised about whether the home-grown plan being implemented by Government is enough to turns things around or if external assistance – specifically the IMF’s – is required.
While announcing that the IMF is giving Barbados advice on its tax system as well as statutory corporations, Minister of Finance and Economic Affairs Chris Sinckler said there was no need for a formal programme with that institution, the kind of help that other Caribbean countries, including Jamaica, are now involved in.
However, there are others who differ, while some think a combination of local and foreign effort could be the best solution.
From as far back as August 2012 Sinckler was dismissing talk of the IMF’s intervention.
“There is no IMF programme in Barbados; there is no contemplation of an IMF programme whatsoever by this Government. We do not need it,” he said then.
He reiterated the view in May last year while addressing the Barbados Chamber of Commerce & Industry’s (BCCI) luncheon when he said: “There will be no IMF programme, not now, not June, not this year, and if we act as we are supposed to act, not in the foreseeable future.”
Sinckler and other officials, including Central Bank governor
Dr DeLisle Worrell, think that the fiscal adjustment programme adopted by Government is enough to improve the country’s fiscal affairs and there was no need for foreign help.
Others, including current Barbados Economic Society president Jeremy Stephen did not share this confidence, saying in May that on its present course Government would be forced to seek “budgetary support” from the IMF by March next year.
He identified heavy reliance on short term financing as a major source of Government’s fiscal problems.
The BCCI also voiced doubts about Government’s fiscal adjustment programme.
Just last week, speaking at a breakfast discussion hosted by her organisation, BCCI president Tracey Shuffler said the programme was “sluggish and well behind targeted pace in both revenue generation and expenditure cutting”.
She also regretted that a year ago the BCCI suggested a hybrid approach involving a local plan and input from the IMF through “a standby arrangement” but that this had been “roundly rejected” so far.
A few months ago, the IMF said there was a need for urgent fiscal consolidation in Barbados and that while Government had implemented most of the budgetary measures it announced there was a need to ensure these achieved “material results” in the near term.
Western Hemisphere deputy mission chief Nicole Laframboise also said the economy still faced “major challenges, including low growth, a very large fiscal deficit, and a high debt burden”.