Prime Minister Freundel Stuart again has said he would consider turning to the International Monetary Fund (IMF) for assistance in addressing the island’s current fiscal challenges if it were necessary.
However, Stuart told Parliament today the country was not badly off enough to warrant such a move.
Only yesterday, former Prime Minister Owen Arthur stated that Barbados’ move to the international lending agency was inevitable, as Government continues to grapple with a $3.3 billion debt.
But in his contribution today to the debate on the 2017/2018 Estimates of Revenue and Expenditure, Stuart was firm in his resolve that this was not the case at this time.
“I have heard all of the talk in Barbados, I heard the member for St Peter [Arthur]say yesterday that we should go into an IMF programme and so on. I want to make it very clear, I spoke to the Chamber of Commerce in January, and I said there will be no panicky resort to the IMF by the present Government of Barbados.
“If the stage is ever reached where it has to happen, as with the case of [then Prime Minister] Tom Adams, as with the case of [then Prime Minister Erskine] Sandiford, this Prime Minister will have the courage to look the country in the face and say, ‘look, here is what the facts are, here is what I think we have to do for the good of this country’. But that is not an agenda item of this Government at this stage.”
Stuart reminded the House that Barbados had joined the Washington-based institution in 1970 under a DLP Government, with no support from the then Opposition Barbados Labour Party.
He also stated that “both sides have to plead guilty” in the IMF debate because “we too have thrown the three letters, IMF, at the country without explaining our relationship with the IMF, and leaving people scared, and the Barbados Labour Party has done the same thing”.
In his contribution to the debate yesterday, Arthur had also recommended breaking the peg of the Barbados dollar to the United States currency.
In setting out his case before Parliament, Arthur had said that other currencies should be considered to help stabilize the Barbados dollar, which the fired Central Bank Governor Dr DeLisle Worrell had warned was facing devaluation because of the continued printing of money to support Government programmes.
The former Prime Minister had contended that the peg to the US dollar was making Barbadian exports more expensive, and making it more expensive for investors coming from the United Kingdom and Germany to invest here.
However, Stuart all but shot down the idea today, insisting the peg had served Barbados well since 1975.
“It has made our business transactions certain; our business people have been able to rely on it, our citizens have been able to rely on it. It is true that the US dollar has been strengthening against other currencies in recent times, but that has happened before and that can change as well,” he said.
Stuart’s administration has come under sharp criticism from the Opposition and economists for printing money to meet its financial obligations.
The Prime Minister made it clear while the practice would not continue forever, there was nothing wrong with it.
“These things are not new. They are not desirable in the context of our overall macroeconomic aspirations, but sometimes they become necessary. And you only have to ask yourselves if they are not done, what the consequences will be for the society,” he said.
Stuart also told the House he had agreed with earlier statements by Opposition Leader Mia Mottley that Barbados was running a Government that it could not afford, referring to the situation as “an entitlement superstructure” which could no longer be supported or maintained by the country.
“We have this post-independence . . . entitlement superstructure in Barbados and for a while we were able to maintain it. It served us very well, it helped us to create the kind of middle class we have needed to push Barbados forward; it has education and human resource development at its centre, we have health also at the centre . . .
“The fact that we have this entitlement superstructure, and the fact that the financial infrastructure has narrowed, and is now having profound difficulty supporting that superstructure, is what the politics of Barbados going forward over the next 50 years has to be about.”
He insisted that the matter must be addressed urgently, and he was ready for dialogue.
“There is no divide on either side of the House on the issue of whether we are running a Government that we cannot afford or not. There is consensus on that, that we have to bring our revenues and our expenditure into some kind of balance again. And it’s going to require either finding ways to increase our revenue, or finding ways to bring down our expenditure,” Stuart said.