An economist is advising the Barbados Government to negotiate an International Monetary Fund (IMF) programme sooner rather than later because it has no chance of meeting its targets in time.
The Freundel Stuart administration is hoping to slash about $35 million from its budget at the end of this financial year which ends March 31, and to achieve a further $143 million in the next fiscal year.
But immediate past president of the Barbados Economic Society Ryan Straughn told Barbados TODAY the Government had “dilly-dallied” too much with the measures for the past six months or so and it was now too late to rescue the economy through the planned fiscal strategy.
“We still have a current account deficit of nearly $500 million on the fiscal side, at the end of December,” said Straughn.
“The truth is that we might as well just go to the IMF and start the negotiations because the process takes a little time to conclude. So we are better off now . . . Because the one thing we cannot afford to do again is borrow another set of money because the reserves are running out. We need to restore some confidence in the market and the government is, quite frankly, unable to do so. It needs some help.”
Straughn said it would cost Barbados more if the country ends up turning to the IMF when it is “down and out”.
“We are almost down and out already but it will simply cost more. The noose around our neck right now is the current account deficit on the fiscal account as well as and the fact that the Central Bank is a willing participant in allowing the Government to continue to spend by printing money,” added the economist.
“We absolutely need to go to the IMF and we should have done so a long time ago but clearly Central Bank and the fiscal authorities seem to convince themselves that they don’t need any help when clearly they do. And at this point the International Monetary Fund is the only institution that is capable of remedying this situation given the enormity. This is not a normal fiscal situation that Barbados has found itself in. To bring ourselves out of this we really do need to get some external intervention to bring some order to the public finances,” insisted Straughn.
Saying that the country lost about $100 million in the first month of this year, Straughn forecasted that by the end of March “we will be right back at square one where we would have been had we not borrowed” the $300 million in December.
He said Government therefore had no time to implement its measures to achieve the goals, adding that some “heavy lifting” would be required next financial year.