Barbados should not rule out turning to the International Monetary Fund (IMF) for help in reversing the current economic woes facing the country, according to a noted economist.
Dean of the Faculty of Social Sciences at the Cave Hill Campus of the University of the West Indies (UWI) Dr Justin Robinson today prescribed a cocktail of remedies for the struggling economy, many of which have already been put forward by several of the island’s top economist.
Delivering the Democratic Labour Party’s lunch-time lecture entitled, Barbados 50-Achievements and Challenges, at the party’s George Street, St Michael headquarters, Robinson argued that while Government may be concerned about devaluation as a condition for an IMF bailout, the option remains viable if the Freundel Stuart administration first outlines it non-negotiable positions.
“Barbados is a member of the IMF, it has paid its dues faithfully over the years. The IMF is an organization that is there to help you as a lender of last resort. Now, Barbados has been trying to do its own programme of fiscal consolidation, [however], there are certain advantages with being in an IMF programme,” he said.
The senior lecturer in management suggested that an IMF programme would give credibility to Government’s efforts at fiscal adjustment and would restore lender confidence.
As a further incentive, he said, Barbados would have access to low interest loans, a point emphasized by former Prime Minister Owen Arthur last week at a lecture at the Errol Barrow Centre for Creative Imagination.
However, Robinson warned that the “devil is in the details” and Government would first have to set the threshold of its sacrifice before going into negotiations with the lending agency.
“One of the challenges of any government facing the IMF is that you cannot know before hand what those conditions are. I would suspect that for the Government of Barbados one of the concerns would be whether or not the IMF would require devaluation as part of that programme. So a country looking to get into an IMF programme needs to work out, ‘what are my non-negotiables,’” the senior economist said.
Robinson also contended that Government could adopt the means testing approach in relation to social services.
He argued that Barbados had the challenge of making major fiscal adjustments while maintaining the universal access to social services, which had been integral to the country’s development over the last 50 years.
“If you have a fiscal problem it means that your expenditures are greater than your revenue. In terms of closing that gap, you either have to cut spending, increase revenue or some combination of the two. To date the Government has tried to close the gap by getting new revenues and my sense is that has gone as it could go.
“There is a menu of options and I think there is room for all of these solutions. There is room for means testing; we still maintain the Scandinavian model where everyone has access to the social services regardless of their level of income,” he added.
To hammer home his point, Robinson contended that most Barbadians with health insurance would use their insurance at private health care facilities but would refuse to do so at the Queen Elizabeth Hospital. He argued that this practice only served the interest of the insurance companies while draining the taxpayer.
The UWI lecturer also advocated partnerships between the public and private sectors, such as the one undertaken by the Sanitation Service Authority with private waste haulers.