A TWO-YEAR WAGE FREEZE in the Public Service and immediate cuts in Government spending form part of a new International Monetary Fund (IMF) prescription for the flagging Barbados economy.
In a statement issued last night, the IMF urged Barbados to limit its expansive social spending to the “most vulnerable parts of society”, given the Freundel Stuart-led administration’s “limited fiscal space”.
Just days after presenting the outlook for the region at the Central Bank of Barbados, the IMF’s mission leader Therese Turner-Jones also had some stern advice for Government.
“Additional measures will be needed and implemented quickly if the debt-to-GDP ratio is to stabilize from its high level and be further reduced over the medium term. The team advised adoption of a wage freeze for the next two years to curb current spending and signal wage restraint in the economy generally to help boost competitiveness and lower inflation expectations,” Turner-Jones wrote in her report.
She warned Barbados that given its fixed exchange rate regime, it was important that the country tightened its “fiscal stance” in order to “guarantee external sustainability” and to strengthen its international reserves position in light of lower foreign reserves accumulation so far this year, and an uncertain global economic situation.
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