IMF adds to PM’s woes
There needs to be what I call some very strong one-time action to cause a correction that is fairly large in the initial years. – IMF mission chief for Barbados, Therese Turner-Jones, on a strategy to turn around the crisis in the economy.
AS THE CLOCK TICKS inexorably towards Election Day, the Freundel Stuart administration finds itself in an eerily similar position as it did two years ago shortly before the January 20, 2011, St John by-election.
Back then, as now, the Prime Minister was faced with the hard choice of timing an election within a narrow window of the legal requirements and with the Christmas season fast approaching.
The major difference this time around is the removal of the element of certainty in the outcome of the
by-election which was the presence of the widow of the very popular St John MP, the late Prime Minister David Thompson, as candidate for the ruling Democratic Labour Party (DLP).
Though the DLP was assured of victory in the contest for the seat it has held since 1958, the circumstances that made the by-election almost a foregone conclusion are not present for the party in the impending general election which must be held by April next year.
And that is what makes the element of timing so important for the Prime Minister now, as he weighs his options for an election date even as his administration seems to be lurching from one negative issue to another.
And to add to Stuart’s election woes, his possibly sleepless nights would not have been made any less so by the very public excoriation of the Government’s response to the fiscal crisis by a senior official of the dreaded International Monetary Fund (IMF) late last week in Trinidad and Tobago.
Take quick, corrective action
The IMF’s deputy division chief Therese Turner-Jones, who is also the fund’s mission chief for Barbados and Guyana, told the country point blank that it must take quick, dramatic, corrective action, similar to what was done during the crisis of 1991, in order to turn around the economy as its current strategy was too slow and too gradual.
This current DLP Government has seemingly turned its face against the urgent and strong measures taken by its predecessor in 1991 when confronting similar, though not parallel, circumstances in favour of its much vaunted 2010 Medium-Term Fiscal Strategy (MTFS), and a fiscal consolidation programme, the face of which is the Minister of Finance (and Stuart’s chief rival for leadership), Chris Sinckler.
“One of the things we [the IMF] are learning from lessons around the world is that for our (my emphasis) medium-term fiscal strategy and fiscal consolidation to be credible, the most important thing is that it needs to be frontloaded,” she told the WEEKEND NATION.
By frontloaded, the IMF means spending cuts in the areas of Government transfers to agencies such as the Transport Board, and public sector salaries, possibly leading to layoffs, where the pain is endured upfront, as opposed to the more gradual approaches which may be politically and socially acceptable.
The IMF official noted that in 1991, Barbados’ economic difficulties were much more pronounced than now and foreign reserves were “very low” so that the actions needed then were much more dramatic.
“Given the severity of the crisis then, the most credible action that was taken was the huge (eight per cent) in public wages,” she said. “That’s very difficult to sell politically now in an election year, so I think that’s going to be very complicated.”
However, she added, the fiscal strategy being pursued in 2012 was of “extreme concern” to policymakers like herself, who believed this strategy was much too slow and too gradual.
“The medium-term fiscal strategy as it currently exists involves trying to reduce Barbados’ debt-to-GDP ratio over the next five years. That involves the deficit being trimmed from year to year between now and then.
“But the fact that Barbados has just been downgraded a couple months ago would suggest that the ratings agencies don’t think that this is a sufficient effort.
“So, in my view, the effort could be stronger upfront initially and then perhaps more gradual towards the end. What’s needed right now is probably more dramatic action.”
Government’s response, through Sinckler, was not unexpected: the MTFS is working, the economy is stable but the IMF is “not listening”.
What was not unexpected though was the absence of a response from the Prime Minister, who two years into his tenure, has shown anything but an inclination to be dramatic; rather, he has been slow, reflective and deliberate.
However, it is not beyond the bounds of probability that the Prime Minister would have known of the IMF’s views before they were made so dramatically public. After all, heads of government are routinely in contact with these international agencies and their advice and suggestions are canvassed within the corridors of power in Washington and Bay Street long before they reach ordinary voters.
So, will he now surprise us all by calling an election well within the outer April 2013 tether?
As the national conversation is reheated on a likely date once again (for the umpteenth time!), favoured dates by pundits appear to be early December or around Errol Barrow Day in January, for obvious reasons.
The storyline is that the first would get the matter over and done before the Christmas holidays, and preempt the certain charges of hypocrisy given the DLP’s outraged reaction when the then Prime Minister Owen Arthur announced a general election for January 15, 2008, a mere five days before Christmas Day in 2007, with Nomination Day set for another holiday, December 31.
The DLP was aghast, and accused him of virtually every heresy known to man, the least of which appeared to be that he was interrupting Barbadians’ observance of the birth of Christ.
The plus sign for a new year date, now that Thompson’s once almost beatified image has taken such a battering in the aftermath of the CLICO debacle, is that the DLP could reach back to resurrect the memory of the revered Errol Barrow, its standard bearer even now.
Some shine rubbed off
Of course, some of the shine has already been rubbed off that Errol Barrow Day mystique by Arthur himself who, in addition to the heresy of erecting a statue to the Father of Independence in Independence Square, went one further and announced an election on Boxing Day in 1998 for January 20 – the day before the holiday – and proceeded to inflict the worst ever electoral defeat on the man’s party: 26-2.
Some others are not persuaded, as I am, that Stuart will, and must, bat out his hand. They regard February and March – the end of the Government’s financial year – as difficult months to go to a suffering people, seeking a new mandate.
When, then, will the Prime Minister call the election?
As he himself told the bold li’l man at a summer camp on August 27: “I don’t know!”
Parenthetically, I thought that Stuart, a man known as a quick thinker on his feet, missed a golden opportunity to teach a civics lesson as he could have told the youngster: “I know the date but before I tell you, I have to tell my boss, who is the Governor General, and then I call tell everybody else.”
So will Stuart heed the IMF’s advice now and take an early, dramatic gamble? Who knows.
But then, as is his wont, he may very well dismiss this latest piece of advice as “just another opinion”.
• Albert Brandford is an independent political correspondent. Email [email protected]