Economist Clyde Mascoll is calling on the Freundel Stuart administration to “level with” Barbadians regarding the true state of the economy, and give them full explanation regarding the fiscal adjustment programme.
His comments came following a release on Wednesday by the International Monetary Fund (IMF) regarding the 2013 Article IV consultation
The IMF said the Government was facing the challenging task of meeting its fiscal adjustment targets in an environment of low growth, high debt and a fixed exchange rate.
Mascoll, who is also the Opposition spokesman on economic affairs, said: “It is quite clear that the Government still needs
to level with Barbadians on the true state of the economy.”
“The IMF has also stated that the Government has agreed to do six things which it has to explain to the people of Barbados. One is to implement significant spending cuts and/or tariff increases in the coming weeks. This has started but the real question is what is meant by significant?” said Mascoll.
“The Government has agreed to cease Central Bank financing, that is the printing of money, to release the pressure of the bank’s foreign reserves. This has to be explained, as notwithstanding the borrowing of $300 million in December last year, the foreign reserves have declined by over $110 million so far for this year. And this has occurred during the height of the winter tourist season when the country should be accumulating foreign reserves,” he said.
Mascoll said in the current circumstances, perhaps ceasing the printing of money was the most important initiative that had to be undertaken.
“But this process has several dimensions that must be explained in full to all Barbadians including businessmen,” he said.
“The Government has also agreed to increase interest rates which is contrary to what it was saying in the not-too-distant past. This change in policy requires an explanation since it has serious implications for savings and investment in the country’s economy,” added Mascoll.
The economist said the Government was also expected to work with the labour unions to lower real labour cost over time which would translate to mean wage restraint, which would result in “serious reduction” in the spending power of public sector workers, resulting in “compromised economic growth”.
He said: “The revelations in the Article IV Consultation Report of the IMF suggest that the true state of the economy is not yet known to Barbadians and the time has come to fully embrace the people in this our darkest hour.”