EDITORIAL: What will this week hold for our economy?

TODAY begins what promises to be a week of high expectations about our economy and the involvement of the International Monetary Fund (IMF) in our plans going forward.

Last Friday the Prime Minister and Minister of Finance and Economic Affairs and Investment, the Honourable Mia Mottley announced that a team of officials from the Washington D.C.-based financial institution will be coming to our shores as early as tomorrow. Their purpose here is to start discussions on how the IMF can support the Government’s economic plan. That plan is to rescue the economy, arrest the slide with the foreign reserves and deal with the high debt and fiscal imbalance, which the country has incurred over the course of the last several years.

It is against this background that the country will know during the course of this week what’s on the cards for a major push for economic restructuring, which is being given enormous attention by the new administration of Ms. Mottley. The Government’s plan also envisages support from the IMF to deal with the country’s Balance of Payments situation. More than a month ago the Central Bank of Barbados reported that the foreign reserves amounted to about Bds$423 million or about seven weeks of imports. They would have been more were it not for debt repayments in the first quarter of 2018 and a higher energy import bill on account of the rise in oil prices.

The discussions are expected to involve key personnel from Ms. Mottley’s Ministry, Economists, and personnel from the Central Bank of Barbados, judging from the way these matters are dealt with. It is hard to pin down what the IMF team will insist on once the full details of Barbados’ present economic circumstances are revealed and ventilated. Equally important is what the local team is likely to seek, and to refuse, on these matters, which will form the core of the deliberations.

It is also known from the most recent Report on the IMF’s Article IV Consultations and the Central Bank of Barbados first quarter report for 2018, how the Fund feels about Barbados’ present economic situation and what must be done to correct them. A stronger fiscal consolidation effort remains a core of the Fund’s advice as contained in the Article IV Consultation report, as well as dealing with those state-owned enterprises for which so much is said and written. IMF prescriptions have highlighted that we reform the state agencies, cut expenditure to them, and either merge or close some of them, that would eventually lead to savings and a lower fiscal deficit. As for the debt position, the Government has spoken about debt re-profiling/rescheduling to the point that the Prime Minister said on Friday that all debt repayments will be put on hold for the time being. This has triggered a downgrade by the Caribbean Information and Credit Rating Services Limited (CariCRIS), a regional rating agency.

In all of this Barbados needs to achieve higher growth than what has occurred in recent times since as a component of economic policymaking higher growth is necessary to tackle the shortcomings in the economy. The attention given to the economy makes sense, and like everyone else, we look forward to what unfolds this week.