Beating home drums alone will not do it, so Barbados should also consider outside help from an agency like the International Monetary Fund (IMF).
New Barbados Economic Society (BES) president Shane Lowe said “the two – a home-grown solution and external help such as from the IMF – are not mutually exclusive and can go together”.
The former Central Bank economist told the MIDWEEK NATION: “Ultimately, a home-grown programme, supported and financed by a multilateral lending agency of which Barbados is a member, can help to address the two key issues – reversing the slide in foreign exchange reserves and reducing the fiscal deficit to restore fiscal sustainability and improve Barbados’ externalcredit rating.
“Concessional funding from a multilateral agency can provide the temporary boost in foreign exchange inflows necessary to match upcoming debt payments and provide the funding to permit policymakers to make the necessary investments in technology, renewable energy and other new and existing foreign exchangeearning sectors.”
Such action would then “improve the economy’s competitiveness while reducing inefficiencies, the cost of Government and the size of the fiscal deficit at the same time”, he added.
Lowe, who is strategy and economic analyst at CIBC FirstCaribbean International Bank, said it was also important for policymakers to “tackle the efficiency and effectiveness of many of its state-owned entities”.
He elaborated: “Transfers to public institutions accounted for 23 per cent of Government’s total current expenditure in 2016/17 (as per the Central Bank’s October 31, 2017 press release).”
In terms of the economic forecast for this year, Lowe said “economic growth will likely slow in 2018 as the anticipated growth in tourist arrivals just offsets the persistent weakness in consumer demand for goods and services from the full effects of the May2017 budgetary measures and any additional measures which may be imposed to further reduce the fiscal deficit.
“As it stands, the persistent negative gap between foreign exchange inflows and outflows that has existed since 2013 will likely persist in 2018 unless Government succeeds with planned asset sales and other foreign-financed projects get under way,” he said. (SC)
