Going to the IMF could solve most of Barbados’ financial woes, but more importantly, an industrial policy should accompany any such move, says one of the country’s leading political scientists.
Dr Don Marshall, head of the Sir Arthur Lewis Institute of Social and Economic Studies at the University of the West Indies’ Cave Hill campus, believes such a policy would aid in the Barbados economy overcoming its limited diversification.
Marshall was reacting to recent suggestions by Dr DeLisle Worrell, a former governor of the Central Bank of Barbados, who believes Barbados should approach the International Monetary Fund and enter into a special arrangement which would help shore up the dwindling foreign reserves, and allow Government to decrease its indebtedness.
Worrell had suggested Barbados approach the IMF for a five-year adjustment programme valued around $300 million, as part of a reform package where around 4 500 public sector jobs would be cut.
He said there is the presumption that Barbados’ social capital is sufficiently robust to withstand what would be an unbundling of social pacts and compacts forged in the wake of decolonisation and Independence
“We should note that the measures [suggested by Worrell] extend beyond previous Barbados/IMF engagements, as the twin goals of fiscal consolidation and financial sector enhancement represent new emphases of the Fund and international financial institutions,” Marshall said.
“While the measures in the best of circumstances may lead to a restoration of public finances, it does not pretend to provide solutions to the kernel challenge of the Barbados economy, and that is its limited diversification.
“Indeed, the paradox is that the neoliberal doxa of open markets, financial sector reform, and debt sustainability runs up hard against the commercial-dealing bias of large swathes of the private sector,” he said.
Marshall added that Barbados’ socio-economic predicaments could only be tackled with a robust industrial policy, a re-jigged welfare system marked by means-testing features, and attention to macro-economic fundamentals. (BA)
