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THE HOYOS FILE: Our IMF BFF


Pat Hoyos

THE HOYOS FILE: Our IMF BFF

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While Dr Dolittle and his shipmates remain stuck in irons on the reef of indecision, helplessly hoping their tide of foreign investment will soon come in, the International Monetary Fund (IMF) has begun its campaign to win over the region to its softer, gentler persona, exemplified in the style and sophistication of its managing director, Christine Lagarde.
Giving what may well have been her maiden Caribbean speech, in Jamaica, recently, Lagarde quietly laid the IMF’s position out: we want to be the Caribbean’s new BFF – that is, Best Financial Friend. And who knows? Maybe, in time, our Best Friend Forever.
In her Mona speech, the IMF head said that “The Caribbean has had a tendency to get stuck in the doldrums of stagnation – low growth, high debt, low competitiveness, and high unemployment,” even when the rest of the world had long reversed its truck out of the ditch and proceeded along up the highway.
In Caribbean countries, she noted, growth has averaged less than two per cent a year since the mid-1990s, making them vulnerable going into the global financial crisis, which hit them with its full force. Six years later, she said, output had still not returned to pre-crisis levels, and public debt was still at record highs ­– almost 100 percent of GDP in tourism-dependent countries, and 140 per cent of GDP in Jamaica.
As always, she noted, the poor and the vulnerable were hit hardest by the crisis, and across the region, about a third of young people are out of work. Lagarde championed Jamaica as the poster child of the IMF’s winning ways.
And what, you ask, has Jamaica done to earn the applause of the newly warm-hearted IMF? Well, it has imposed a wage freeze on civil servants, “negotiated” (that verb being my joke for today) a debt exchange for financial investors, saving the country well over US$100 million in interest payments; increased taxes and tariffs for water and transportation, and accepted higher import prices as the exchange rate was allowed to adjust (downward).
Note to those unfamiliar with euphemisms: allowing the exchange rate to “adjust” means a further devaluation of the Jamaican dollar against the US dollar, as in the present and foreseeable future it is quite unlikely to adjust upward.
And as its reward for taking all those tough measures, the Extended Fund Facility approved by the IMF’s executive board for Jamaica is for a total of about US$948 million. Besides getting that big loan, the move toward stability under the guiding hand of the IMF sends a message to foreign investors that things are back under control and that the country is once more investment-safe and -friendly.
So is devaluation an eventual inevitability for us here in Barbados if we decide to hit the “Like” button for the IMF? There does not seem to be much of a way out for us as far as I can see, because I am not constantly scanning the horizon, as our Government ministers seem to be – hoping, like so many Merchants of Venice trying to avoid their date with Shylock, for friendly gold-bearing masts to arise from below it.
I was shocked to read this week that after promising to clean up the fiscal mess that is our collective group of state-owned enterprises and doing whatever it took to make them productive and non-draining on the state’s coffers, that the best Dr Dolittle could do in almost a full year of this type of talk was to appoint a weak Oversight Committee to worry about them for him and, yes, to make recommendations.
In his Budget Speech last August, Minister of Finance Chris Sinckler said there were far too many statutory corporations, which cost too much to run and whose functions often overlapped.
He added that last June a team set up to look into them had proposed the reorganisation of 18 such entities, due to “similarity of mandate, overlapping functions and sameness of services provided.”
This group of entities, he said, “covered such areas as public housing, sports facilities management, investment, youth and cultural affairs and sport, (and) expended close to $130 million and provided just over 1 600 jobs between them.”
Remember, the government has to cut close to $300 million out of its expenses under its own fiscal strategy.
But probably after getting stung by too many metaphorical bees over the way it went about sending home people (which it also has no choice but to do), Dr Dolittle and his hearty sailors backed down again, appointing instead this Oversight Committee, which will, ahem, implement a plan to collect the arrears of state-owned corporations, and to monitor them in order to achieve greater accountability of these entities.
Was this an oversight? I think not. I am sure we will get lots of fine paperwork out of this committee, whose members comprise some of our most erudite minds, and which will be fully staffed (of course).
No matter that we already have all these organisations in place already, notably the “Social Partnership.” Not enough, there must be another.
You see, we in Barbados are very good at appointing committees to find ways to make recommendations toward solving our problems, even as they continue to mount. In the meantime, I am getting ready to add the IMF to my BFF list.

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