Government would require greater fiscal discipline than it currently demonstrates if it were to turn to the International Monetary Fund (IMF) for a bailout, says Acting Governor of the Central Bank of Barbados Cleviston Haynes.
Haynes Tuesday told journalists at his news conference to report on the island’s economic performance for the first quarter he was not prepared to give Minister of Finance Chris Sinckler policy advice in public.
However, with leading economists, including former Prime Minister Owen Arthur and Haynes’ former boss Dr DeLisle Worrell advising the Freundel Stuart administration to seek help from the IMF, the Acting Governor said an adjustment programme from the Washington-based lending institution was an option Government could choose to exercise.
The Stuart administration has already ruled out going the IMF route.
“We mustn’t treat the question of going to the IMF as a panacea because going to the Fund requires even greater discipline than we have been talking about previously. And we need to demonstrate that discipline ourselves. So whether or not we go to the IMF there is a need for strong fiscal adjustment,” Haynes explained.
“If we are honest with ourselves, even though we have taken a number of initiatives, we have not been able to achieve all of the objectives that we have set for ourselves in recent years and that becomes a worry for us and those who are looking on at what we are doing.
“We have not been able to reduce the deficit as quickly as we would have wanted – we have had issues of execution – so the economy has not grown in the way that it was forecast that it would. So these are things we have to address.”
Haynes suggested that since the Stuart-led Government was still struggling to exercise fiscal discipline with its own homegrown approach, it would be almost impossible for Government to apply fiscal obedience when it came to an IMF adjustment programme.
In any event, he said, there were several pertinent challenges that Government must address whether or not it seeks IMF assistance.
These challenges include bringing down the fiscal deficit, the restoration of the international reserves, the creation of a framework for promoting and creating economic activity and lowering the country’s debt, he said.
In addition, the Central Bank official agreed that in order to maintain some of the vital social services that Barbadians enjoyed over the years, there must be “some adjustments” over time, given that some “entitlement programmes” had grown “quite significantly”.
“Therefore we have to review and see the extent to which some change is required in those programmes. But if we don’t address our fiscal issues then our adjustment could become what I call disorderly, and a disorderly adjustment is in no one’s interest,” Haynes cautioned.