Barbados is paying dearly for its failure to turn to the International Monetary Fund (IMF) for help, respected financial expert Peter Boos has warned.
Declaring that the Barbados economy is in crisis, Boos, who is chairman emeritus of Ernst & Young Caribbean, insists the island should not delay the inevitable any longer.
“It is the thing to do and I don’t think there is an alternative,” he said here on Sunday, while urging the Freundel Stuart administration to stop denying the severity of the island’s economic woes and to make urgent, far-reaching structural adjustments.
Citing Barbados’ high debt, deteriorating infrastructure and growing frustration over the lack of ease in doing business, Boos stressed the road to economic recovery was long and hard but the island could hardly avoid the IMF route.
In fact, he suggested that Government’s determination to keep the Washington-based financial institution at bay had resulted in harmful investments that were not in the country’s best interest.
“The truth of the matter is Barbados has been forced to do deals in the hotel sector in which we gave away huge concessions for 30 years in order that we could get some investments. On the other hand, had we gone to the IMF we would have actually not had to give away those concessions, we would have had to agreed to more discipline in how we manage our affairs, which is what we need and we would have gotten, or can still get, significant foreign exchange in the country to repair our infrastructure and to do all the things that we need to do,” he contended.
His comments were an obvious reference to Sandals Resorts, which opened its doors in January 2015, after receiving a 25-year tax holiday that includes a waiver on all import duties, taxes, impost and levies on capital goods such as building materials, as well as food, alcohol and beverages.
The waiver also extends to duties on the importation of motor vehicles and personal and household effects for senior hotel staff and non-Barbadian workers.
At the end of 25-years, the rate on concessions to Sandals will be cut by 50 per cent for an additional 15 years.
Although Government has staunchly defended the concessions offered to the international hotel chain, saying they were not unusual and were in line with incentives offered to similar tourism ventures and have been touting the benefits of the Sandals hotel brand, Boos is equally adamant that Barbados should not “give away the opportunity to get funding from the IMF” arguing that it was better than “doing deals with people whose simple motivation is just to make money.
“I am not saying that those investments are not good for the island, but they are coming at a hell of a price,” he contended.
He added that Barbados was urgently in need of money and this could hardly be provided by the private interest.
“I think we need the money very badly and I think we will need to go to the IMF for those funds and that will come at a price but we have gotten ourselves into this situation. We have some tough decisions to make and we have to hunker down and everybody has to carry some weight,” he said.
However, the businessman stressed that the structural adjustment needed was not merely about numbers. He underscored that strong action was needed to rectify the fiscal deficit, improve competitiveness and productivity, and reform of the judiciary.
“Where we don’t have those things that is where we have to our focus but just leaving things as they are is not an option.”
Minister of Finance Chris Sinckler has previously dismissed talk of Barbados entering an agreement with the IMF, saying the Government’s fiscal programme could return the island to economic prosperity.