‘Peg dollar to multiple currencies’

“If ever there was a time when we were at the stage of last resort, having exhausted virtually every source from which we can get resources to support the balance of payments, to support public activity – that point is now!”

This was the telling statement coming from Former Prime Minister, Owen Arthur, while once again pleading with the Freundel Stuart-led administration to get help from the funding institutions, including the Inter-American Development Bank, the Caribbean Development Bank and the International Monetary Fund (IMF).

In a pointed speech, the frank Former Finance Minister insisted that a home-grown solution was not enough to deal with the large economic problems this country was dealing with.

Pointing to the Government’s plan to attain just over half a billion dollars in nine months, Arthur noted that the IMF’s Article IV Consultation last year had proposed a plan to gain just over $300 million over 3.5 years; a programme that would not have inflicted as much pain on Barbadians as that proposed by Finance Minister Chris Sinckler in his Budgetary Proposals on Tuesday.

In addition, he spoke on the arrears Government owes to the University of the West Indies, the private sector and Barbadians in terms of tax returns, stating that within an IMF programme these would be cleared off.

“If you have a programme with the International Monetary Fund and the fund lends money, it lends you under the condition that if you have arrears you have to clear them,” he said.

He stressed that there could no longer be the reliance on the Central Bank and the National Insurance to help Government with debt, adding that there must be a programme agreed on with all of Government’s creditors “to take us out of the situation of an unsustainable position where trying to pay the debt over the course of the next four years will put the Government in the position where it will default on the payment of the debt, and in fact may even deplete its reserves.”

Arthur also said that it was time the island unpegged its dollar from the American dollar, stating that its strength was dragging this country down. He instead suggested that the island go the route of Singapore and peg its dollar to multiple currencies, with 40 per cent to both the British pound and the American dollar, and 10 per cent to both the EC and Canadian dollars. (JMB)