EDITORIAL: High hopes for IMF agreement
SUBJECT to the approval by the Board of Directors of the International Monetary Fund (IMF), Barbados appears to be cleared for a new agreement with that Washington D.C.-based financial institution.
Many people in Barbados had been calling for the country to seek an arrangement with the IMF, especially when it was clear that economic recovery programmes undertaken by the previous administration were not quite leading to improvements in the island’s economic fortunes. Critics of the then government were making the point that, all along, Budget after Budget loaded with tax increases, along with home grown plans, were not delivering the goods in stabilising the country’s economy. At one point IMF-type policies were being carried out without the accompanying financial inflows. These plans were not given the broadbased support that was very necessary when a country undertakes measures and policies to correct economic shortcomings.
The Barbados Labour Party (BLP), when in opposition, had said in the last General Elections that the IMF would be an option in their attempts to correct the problems in the economy, once they form the Government. Since winning the elections and subsequently forming the Government, the IMF option became the policy of choice and that is where we are right now.
Last Friday at Government Headquarters the new Fund programme was outlined, even if all the details to what the country will be going through have not been made public. Our hope therefore is that what has been presented to the public of Barbados, along with measures enacted last June, will work and get the country’s economy out of the prevailing predicament. Currently, Barbados wants a return of economic growth; it wants its twin deficits (fiscal and external current account) to be low and within manageable proportions; it wants as well adequate levels of foreign exchange reserves to meet all the demands that are made of those same reserves; it has a big debt problem and consequently would like to see a downward movement in the high debt, to more comfortable levels; and it wants more investment to stimulate economic activity and job creation. In the current scenario, these are a lot of things which are required to give more of a boost to our economy.
Will the measures work? We have no crystal ball to suggest they are going to, and equally are unable to suggest they won’t. There are those among us who are not impressed with the IMF and doubt whether the programme under its guidance will do what is required. But those who have been agitating for it over the last two years believe it is the answer to our present woes. They say too that with the discipline which the Fund will inspire, it can work and restore economic stability.
However, the government has to make it work because of the country’s expectations. It is a very tough programme in which there will be pain and frustration. Having gone through a lot, people will hope that this new experience will not be in vain. The programme is expected to last over four years from which positive results are expected.