WHAT MATTERS MOST: Is Govt flying IMF kite?
IN RECENT WEEKS, there has been a spate of commentary by experts on the need for the Government of Barbados to undertake a stabilisation programme with the International Monetary Fund (IMF).
The suggestion was vehemently rejected by the Minister of Finance, Christopher Sinckler. This is consistent with the views of his economic advisers.
However, almost two weeks ago, Minister Sinckler felt obligated to respond to Professor Michael Howard, who noted that the Government should have opted for a programme with the IMF instead of pursuing a home-grown one, which has been in place since 2010.
Minister Sinckler said: “Three years ago, the IMF staff made it very clear to us that while some of them believed and would support a programme for Barbados that did not include a devaluation, they did not believe they could get that past their front office senior managers or the executive board.”
The minister said further that he and the governor met with the front office personnel and “. . . what they were selling we just were not willing to buy”. He however appears to be willing to buy, should the IMF’s position change. This is gleaned from the following statement: “Now if it is that the conditions for engagement have changed significantly from what we were told then, and what we understand to be the current position, then I would be only too glad to learn this officially.”
Why would the same minister be opposed to Professor Howard’s position and in the same interview be only too glad to learn about the changing position of the IMF? The Barbadian public needs to know the Government’s true position on a stabilisation programme with the IMF. The minister and by extension the Cabinet seem rather willing to buy at this time.
The evidence makes it very clear that the home-grown programme has failed. The national debt has more than doubled. The foreign reserves have declined significantly. The economy has not grown and is indeed smaller than in 2008. The Government has bought some employment but at the expense of employment in the private sector.
The interview of the minister of finance created an odour of suspicion the higher he held his arm up in protest. Notwithstanding his desire to learn officially if the IMF’s position on devaluation has changed, he charged that “. . . whether you do an IMF programme with a devaluation or not, it will be no bed of roses or sweet cakes and lemonade. You will have to do all of what we have done already and much more”.
Sometime ago, we were told that the country has a cadre of professionals who are capable of providing as good advice as those at the IMF. So why would Barbadians have to do much more if the minister and the Government buy into the IMF’s way?
This brings me to the constant refrain of the Central Bank governor that there is a need for more fiscal adjustment. Perhaps, the minister and the governor are running out of options. As a result, this may be the perfect time to fly the proverbial kite, as Barbadians are coming out of the prolonged Independence celebrations and going straight into Christmas.
In the circumstances, one is left to wonder about the spate of recent commentary on the IMF. Is the commentary a loud whisper that may become louder in the coming weeks?
The last time I heard a loud whisper, it was a thing of beauty that caused an exclamation at Kensington Oval, much unlike what this one portends. On that occasion, there was a delayed cover-push by Lawrence Rowe to a good length ball from the English bowler, Chris Old, that went slightly backward of square and did not hit the boundary board. Its failure to reach the boundary was indicative of how sweetly it was caressed. This shot came immediately after a hook shot from a bouncer that was executed while Rowe was whistling.
On this occasion, there will be nothing sweet about the way the Government is preparing to play the IMF ball. Furthermore, this would have come after years of fiscal ignorance wrapped in excessive taxation and printing of money.
The prospect of the Barbados Government even contemplating a programme with the IMF smacks of extraordinarily poor economic leadership. It would speak to our setback rather than progress as a country in the year that so much has been made of our 50th anniversary of Independence. Not so fast, Mr Minister.
• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party advisor on the economy. Email: [email protected]