Former Prime Minister Owen Arthur says it is highly unlikely that a Barbados Labour Party (BLP) Government would be able fulfil many of its campaign promises, including one its signature plans to reinstate free tertiary education, if it goes to the International Monetary Fund (IMF).
In fact, Arthur, who is a trained economist and former Minister of Finance for 14 years, warned today that instead of a repeal of tuition payments instituted by the current Democratic Labour Party (DLP) led administration, Barbadian students attending the University of the West Indies could be asked to pay both tuition and economic costs.
“I don’t think the Fund is going to support the payment of tuition fees for university education in Barbados. In fact, I think that the situation has gotten so bad [with the economy] that if you go to the Fund now, having just exhausted every opportunity, the Fund may tell the Government that they can no longer pay the economic cost,” Arthur told reporters during a press conference at Barbados TODAY’s, Manor Lodge, St Michael office this morning.
Arthur, who has been persistently recommending over the past two years ago that the island enters into a formal programme with the Washington-based IMF to stop the free fall of Barbados’ foreign reserves, argued that with the reserves now at $423 million, 5.1 weeks under the recommended 12 weeks of import cover, Barbadians should brace themselves for a no frills, rough ride under any programme agreed to with the Fund.
In 2014, amid serious economic challenges, the DLP implemented its decision for students attending the UWI to pay 20 per cent of their tuition costs, in effort to save Government $35 million per year. The move has resulted in hardship for many Barbadian students who have been forced to drop out of the tertiary institution.
However, last year at her party’s 79th annual conference, Mottley gave the commitment that a BLP Government would immediately repeal the DLP’s decision if elected in the upcoming poll.
This pledge has since made its way into the BLP’s 70-page manifesto released last week ahead of the May 24 poll, which also includes proposals for the abolition of road tax, removal of the National Social Responsibility Levy (NSRL), an increase in non-contributory old age pensions and an across-the-board pay hike or cost of living allowance for Government workers within the next three to six months.
During last Thursday’s BLP manifesto launch, Mottley also proclaimed that she was not afraid to go to the IMF if that were required to turn the ailing Barbados economy around.
However this morning, Arthur, who has had a hand in drafting Grenada’s successful IMF programme, argued that if Mottley were seriously considering the IMF as an option, it was a contradiction to speak of “lofty giveaways”.
The trained economist contended that the BLP’s promises were geared at winning an election but had not accounted for the reality of running a Government, which “likely has no option, but to go the Fund”.
“If you go to the Fund, you cannot feel as though it is a bed of roses,” Arthur cautioned, pointing out that “when [former Prime Minister] Erskine Sandiford went to the Fund in 1991 the choice was between devaluation or cut public sector wages by eight per cent.
“A new Government is not going to be able to cut wages because the Constitution now prevents that, but they would take the IMF’s money on the understanding that they would restore external and internal stability,” he said.
“That would mean accepting policies that would restore your reserves by US$500 million over a five year period,” Arthur explained.
However, he said “the problem is that Government gives a lot transfers so that state services can be maintained, such as free services at the Queen Elizabeth Hospital and free secondary education. Those transfers are going to have to be adjusted under the IMF,” he said.
The former Prime Minister therefore suggested that Government would need to implement a combination of means testing, privatization of some state assets and tax incentives to encourage persons to save for health and education.