Minister of Finance Chris Sinckler says Government is working assiduously to deal with the island’s economic challenges.
During a recent courtesy call by the visiting former Governor of the Central Bank of Ireland Patrick Honohan, Sinckler also assured that foreign investors were still interested in Barbados.
His comments came ahead of tomorrow’s meeting of the Social Partnership sub-committee – comprising representatives of Government, employers and labour – at which two key economic reports prepared by two separate committees on fiscal deficit and the foreign reserves, as mandated by Prime Minister Freundel Stuart, are to be considered.
All indications are that the Barbados economy is seriously in the red, with tough decisions now needed to pull it back from the brink, with the Central Bank indicating in its the latest Financial Stability Report released earlier this month that while there were signs of recovery with growth of about 1.6 per cent last year and a slight fall in unemployment, the fiscal deficit was simply still too high and remained a source of concern.
The report also raised concern that Barbados’ debt was further downgraded by international ratings agencies during the year, causing a reduction in the financial institutions’ appetite for domestic Government debt.
“At the same time reserve levels fell [below $700 million] to around the equivalent of ten weeks of imports of goods and services,” it added.
In light of that report, Sinckler told Honohan that officials here had paid close attention during Ireland’s financial crisis a few years ago and had noted that such challenges were not easily resolved.
Honohan, who is also an honorary professor of economics at Trinity College in Dublin, and a non-senior fellow of the Peterson Institute for International Economics, shared Ireland’s experience with Sinckler, including going to the International Monetary Fund (IMF). He stressed that any country engaging the IMF should develop its own plan to take to the institution, and insisted that it should have national buy-in.
However, the Freundel Stuart administration has suggested there is no need for the island to turn to the international lending institution for assistance in addressing the island’s current fiscal challenges at this time.
Speaking during the recent Estimates debate, Stuart rejected the advice of former Prime Minister Owen Arthur that Barbados’ move to the IMF was inevitable, as Government continues to grapple with a $3.3 billion debt.
“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,” the Prime Minister had said.