If the Opposition Barbados Labour Party’s (BLP) economic advisor Dr Clyde Mascoll had his way, Barbados would not be subjected to a full-blown International Monetary Fund (IMF) financing arrangement at this stage.
However, a very cautious Mascoll said today he was prepared to follow an IMF blueprint in terms of crafting an appropriate “homegrown” economic solution for the island.
“I am suggesting that the IMF model can be used. This model here, as a model to measure economic progress,” Mascoll said while pointing to an economic equation he said was not widely used but could be effective during a presentation at the Cave Hill Campus of the University of the West Indies on the topic Which Way Out? Homegrown Strategy or IMF Plan.
While rejecting the current homegrown fiscal strategy of the Freundel Stuart administration as an abysmal failure, Mascoll was adamant that “we can do something about finding an economic plan for Barbados.
“You need first of all to establish structural relationships in the economy, between the fiscal deficit, the investment gap and all the liquidity issues here in order, first of all, to be able to analyze the influence of increasing tax [and] increase in expenditure,” the economist said, while warning that without such an understanding “we are going to run aground and that it is precisely what is happening [now].
“So it has to be a much bigger issue than what we have been treating to. We have seen only the issue and not tried to understand the relationships,” he stressed.
With Government currently struggling with a six per cent deficit and a massive overall debt of about 140 per cent of gross domestic product, there have been several calls for various quarters for Government to enter into a formal programme with the IMF.
There have also been several warnings, including those of former Prime Minister Owen Arthur that given Government’s slim financing options and failed or slow fiscal policies, an IMF programme may be inevitable, even though the ruling Democratic Labour Party (DLP) administration, whose current five-year electoral term expires next year, has been very reluctant to heed any such advice.
However, Mascoll, who is a key advisor to the Mia Mottley-led Opposition and a former BLP political candidate, today stayed clear of making any such commitment, even though he appeared quite more than willing to borrow freely from the advice of the Washington-based fund.
While stressing that Government’s medium-term fiscal strategies had failed, he pointed to some “unintended consequences” such as “persistently large current account deficits, galloping Government debt and excessive printing of money and little or no growth.
“So going forward I am hoping therefore that we could have a homegrown economic plan . . . that can work,” the Opposition spokesman said.
“You cannot have a fiscal strategy alone because there are other agents in the economy – households, businesses. Government cannot focus on itself and itself alone,” he cautioned, while accusing Government of only focusing too heavily on taxation as a means of raising revenue.