Two weeks of economic consultations between Government and the International Monetary Fund (IMF) ended today with officials mum on the details of the closed-door Article 1V discussions.
However, were this island’s economic management placed in the hands of the United Progressive Party (UPP), a borrowing relationship with the Washington-based lending institution would not be out of the question at this delicate stage.
With the economy currently said to be limping along under the weight of a $300 million deficit, a national debt of 144 per cent of gross domestic product, and less than adequate foreign reserves of below $600 million, or eight weeks of import cover, UPP Leader Lynette Eastmond said today her party was willing to “review all options for borrowing, including [going] to the IMF”.
However, even with the IMF warning that the reserves position places the Barbados dollar in great peril, the UPP is strongly refuting the idea of a devaluation of the Barbadian dollar, which is presently pegged two to one against the United States currency.
“The IMF is saying that they are not ruling out a devaluation because they must say that, but we are not ruling it in,” Eastmond said during the launch of the first in a series of mini-manifestos for the upcoming general election, constitutionally due by the middle of next year.
So far both the ruling Democratic Labour Party (DLP) and the main Opposition Barbados Labour Party (BLP) have been tiptoeing around the IMF discussion, with the BLP only willing to commit itself at this stage to implementing an IMF modelled homegrown programme.
Minister of Finance Chris Sinckler on the other hand continues to vigorously defend his own brand of homegrown medicine, even with the majority of indicators pointing in the wrong direction.
However, it remains to be seen how the IMF will respond to his latest Barbados Sustainable Recovery Programme, which is due to be laid in Parliament shortly, detailing Government’s latest fiscal consolidation targets.
At the end of its last Article 1V consultation back in June, the IMF team, led by Judith Gold, said it stood “ready to assist the Government of Barbados, including through continued policy dialogue and technical assistance”, while making it clear that the island’s economic problems were not over by any measure.
“Growth in 2017 is projected to slow to less than one per cent, reflecting the fiscal consolidation efforts introduced in the FY2017/18 Budget,” the IMF team had warned then, while it also cautioned that domestic inflation, which stood at 3.2 per at the end of last year, was likely to accelerate to 6.7 per cent by the end of 2017.
With those prophesies essentially coming through, Gold and her team are headed back to Washington to complete their latest assessment, having met with Sinckler, Acting Central Bank Governor Cleviston Haynes and other key Government officials, as well as senior representatives of the private sector, the trade union movement, including the Congress of Trade Unions and Staff Associations of Barbados (CTUSAB), Opposition Leader Mia Mottley and civil society.
The team is due to submit its full report by January.