Former Prime Minister Owen Arthur is not surprised that the recently fired Central Bank Governor Dr DeLisle Worrell is now publicly advising Government to go the route of the International Monetary Fund (IMF).
In fact, Arthur suggests that Worrell may have been pushing the Freundel Stuart Government in that direction all along.
“I think that in fairness to Worrell, he might have, when he was Governor, sought to jumpstart things by writing the Fund and telling the Fund, ‘look, send a team’,” said Arthur, while recalling recent reports of an approach by Government for Barbados to enter into a formal IMF programme.
While those reports have since been denied by the Washington-based financial institution, Arthur said: “If you investigate you might find that it was Worrell who said, ‘look, I’m tired printing money. I know that what I am doing is wrong, this got to stop. I can’t get it to stop unless we have significant help from the international financial community. Fund, come and help’.
However, he said, in absence of consensus within Government on taking the country the IMF route, Worrell’s hands were tied. Therefore, ahead of his sacking, Worrell acted against his own best professional advice and continued to print money, even though he knew it was the wrong thing to do and to the detriment of the country’s foreign reserves, which fell below 12 weeks of import cover to less than $700 million last December.
Today, Arthur pleaded with Government to set aside all “false pride”, as he again reiterated the urgent need for Government to seek an IMF-sponsored solution to the country’s dire economic position.
“You cannot have a false pride. The situation that our country faces is one that can only be resolved with very significant financial help from the international financial community on the best possible terms, properly negotiated to make sure that the problems that are to be dealt with are dealt with effectively, the economy is put on the mend and the society is not put under peril,” said Arthur, who has been calling for the past three years, to no avail, for debt restructuring and privatization.
Back in March during the annual Estimates debate, Arthur also put the issue of US dollar parity on the table, and today he strongly reiterated that “the [Barbados] exchange rate is there to work for us, not to be a God that we worship.
“There was a time when our currency was linked to the British pound . . . but what we can’t afford to do is to have it linked to a currency that is strengthening and strengthening and making us worse off.
“It is like flying a small single engine airplane in the immediate aftermath of a 747. It will just wreck you.
“So there are fundamental issues that have to be dealt with and they have got to be dealt with,” he stressed.
Arthur, who has recently been sidelined on account of a foot injury, also emphasized the need for Barbados to work with its creditors to fix its situation, warning that “over the next four years Barbados will find itself facing a spike in its debt repayments, where they will virtually double, making it impossible for Government to function effectively”.
As for Worrell not being convinced that the sale of assets will yield the desired economic turnaround, Arthur warned that it was not only the sale of assets, but also the rationalization of them.
“We have 63 state enterprises and at one stage you had to find $1.2 billion a year to carry them. Now when the economy was stronger, you could,” he said, adding that “the country had now reached the stage were a lot of the entitlements that we give ourselves and the so called free benefits paid for by a strong economy in the form of transfers, you really can’t do that anymore”.
“And these things have to be done not because you want to be wicked, but because they are absolutely necessary,” he said, adding that they must be done in an orderly fashion to avoid a “crumbling” of the economy and the civil society.
He further warned that countries that have gone this way stayed in the wilderness for a very long time.
“That is why it is so important that you act now. It is a message that Grenada understood . . . Jamaica has gone that way, Suriname has gone that way. There are legitimate countries in the world that have programmes with the International Monetary Fund and the Fund is there as a lender of last resort when you have insurmountable problems to deal with.”