Minister of Finance Chris Sinckler says though the Barbados economy is definitely not well at the moment, he is yet to see the logic of those clamouring for Government to immediately put it into the hands of the International Monetary Fund (IMF).
In rejecting out of hand the economic prescription issued last week by the recently dismissed Governor of the Central Bank of Barbados Dr DeLisle Worrell, Sinckler warned on Sunday that even if the Freundel Stuart administration were to decide to go to the IMF tomorrow, it was unlikely that any tangible benefits would be realized from that move within the next six months.
And while at pains to point out that the economic problems the country was facing could not be fixed overnight, he further cautioned that a short term fix was more than desirable at this stage.
“We know the deficit is high, we know the Government is relying overly on the Central Bank, and that needs to be brought under a serious level of discipline and that we are going to do, but we have to do that in a responsible fashion,” Sinckler told reporters on the sidelines of his annual picnic at Bath, St John for senior citizens in his St Michael North West constituency.
“We didn’t get there overnight and I don’t think we are going to be able to unravel it overnight by the waving of a magic wand, or going and doing an IMF programme and so on.
“If we were to say, ‘let’s go to the IMF tomorrow’, it takes between six to eight months to negotiate and complete and have approved by an executive board at the IMF. But if you have an immediate problem that needs to be dealt with now you can’t wait six to eight months negotiating with anyone to get that done. And in any case, the IMF can say, ‘I want to see prior measures. Demonstrate to me that you are going to be serious about x, y or z.’
“It’s not as simplistic as people make it out to be. These are options, but governance is real time,” the Minister of Finance stressed.
However, Worrell is among leading economists who have been calling on Government to bite the bullet and get help from the Washington-based IMF “in designing the reform process to increase efficiency through the employment of higher levels of skill and the appropriate use of new technology, with no permanent diminution in the quality of public services”.
In the first of a series of personal economic letters issued last Tuesday, Worrell, who was fired by Sinckler back in February at the height of their bitter public disagreement over monetary and administrative policy, suggested that in addition to cutting the size of the public service, Government would be “well advised” to seek the assistance of the IMF “without delay” in a bid to safeguard the Barbados dollar.
Worrell’s call came against the backdrop of a worrying economic situation highlighted by dwindling foreign exchange reserves, which fell precariously from $1.4 billion in 2012 to $681 million by the end of last year. Government is also struggling to service its already high debt of over 100 per cent of gross domestic product that requires servicing to the tune of over $300 million annually and the ex-Governor is concerned that the situation will negatively affect Barbados’ currency.
However, while acknowledging that the economy is not yet out of the woods, Sinckler remains buoyed by the fact that it “continues to grow”.
And though very dismissive of Worrell and others, including former Prime Minister Owen Arthur, who have been seeking to push the Government down the IMF road to recovery, Sinckler said on Sunday he was looking forward to this week’s economic review by the Acting Governor of the Central Bank Cleviston Haynes of the island’s first quarter economic performance.
“We wait to hear the acting Governor of the Central Bank’s report and we would have a better idea of what it is and what has happened for last year and for the first three months of this year,” he said, adding that “based on what we are seeing there and what projections we are expecting we would finalize the rest of the fiscal measures to be introduced,” he said.
The Minister of Finance, who is yet to give a precise date for his much-anticipated National Budget, said Barbadians could expect it around the middle of this month.
“We are just finalizing the measures, but as people in Barbados know we have issues to deal with, the deficit is still a bit too high. We have projected a deficit this year on the base line of 4.4 [per cent of the Gross Domestic Product] – that’s in the Estimates. That’s still too high, we have to bring that down by two per cent or below two per cent.
“We would like to go to a balanced budget, but to do that in the remaining period of the financial year, might be a little to steep a hill to climb, but we will see how it goes,” he said.
And while keeping his actual Budget announcements close to his chest, Sinckler said Government was focused on reducing its costs and increasing its earnings.
“We have to look at our expenditures and our revenue collection,” he said.
When asked if the country was in danger of another downgrade from the ratings agencies, the Minister of Finance said he could not run an economy worrying about rating agencies.
“We can’t run an economy worrying about what S&P or Moody’s is going to do next week. What you do is you check and do what you deem to be best for the country and the economy and hopefully that comports what they may want to see. Sometimes it doesn’t but when you are governing, you have to make decisions that are real time and what you believe are in the best decision of the people,” he stressed.