Barbadians have given the thumbs up to Government’s decision to turn to the International Monetary Fund (IMF) for a financial rescue package.
Following talks with the island’s Social Partners, Prime Minister Mia Mottley announced during a press briefing at Government Headquarters on Friday that Barbados’ economic situation was currently so dire that her week-old Barbados Labour Party (BLP) administration was really left with no choice but to seek international help.
In fact, Mottley said a major economic restructuring was now necessary in the face of an out-of-control debt of 175 per cent of gross domestic product, an estimated $15 billion which is said to be $9 billion more than what the previous Democratic Labour Party administration inherited in 2008 when it took office.
And with a team from the Washington-based lending institution due to arrive here on Tuesday, the move by the ruling BLP administration appears to be welcomed by the public.
“To be very honest, we have no choice but to take the route of the IMF. What we are seeing in terms of what the other party has left, we are in so much debt we have no choice,” said 52-year-old Vernon Lowe.
He pointed out that neighbouring Caribbean countries that have recently opted to go to the IMF for support were now on the road to economic recovery.
“I believe it is the wisest choice because other countries who were in more debt than us went to the IMF and their economies have moved from zero at least up to five per cent in gross domestic product. We choose this Government and it is the only thing we can do to get back on a path of recovery. Once everyone is behind our Prime Minister and her Cabinet we will ride out this storm,” Lowe said.
And while in the past, the IMF has been associated with job and salary cuts in the public service, he said: “I don’t think that going to the IMF means that we will lose jobs because we will have to do with different plans than previous.
“I am hearing that investors are looking to come back into Barbados and that will be a good thing. I expect that whatever they put forward must be beneficial to the country,” he added.
Also supporting the move by the less than two week old Barbados Labour Party led administration to go to the IMF for help was Rosalind Davis who told Barbados TODAY it was critical to ensure the island did not sink any deeper into debt.
“For me what I would say is if going to the IMF is the initiative that has to be done, then we have to take it and I am supporting it,” she said, while strongly suggesting that efforts should be made to prevent persons from losing their jobs.
However, she said there was a definite need to bring the country out of debt.
Betty-Ann Taylor was also concerned about the country’s high debt, which she blamed on the former DLP Government.
“Going to the IMF would have to work for us because right now the Democratic Labour Party (DLP) has the whole country in debt so therefore she [Prime Minister Mottley] has to go to the IMF for help because there is nobody else to help her out,” the elderly woman said.
However, while describing the current economic situation as a do or die one, 20-year-old Gharryn Parris was worried about what would be the likely terms of the IMF programme.
“I really believe that Government should go to the IMF at this stage. . . [However], what I am really concerned about is the conditions under which we will go. Normally when governments ask the International Monetary Fund for help, they have to abide by certain rules,” he said while expressing concern about possible job losses and a dollar devaluation.
The last time Barbados entered a formal programme with the IMF was back in the early 1990s when the then Erskine Sandiford-led DLP Government opted for a stabilization and adjustment programme that led to job losses and an across-the-board eight per cent cut in public sector wages.
The bitter medicine proved too much for ordinary Barbadians to bear and resulted in massive streets protests and the eventual demise of the Government.
Since then, there has been a general reluctance to go that route again, with the just ousted Freundel Stuart administration stubbornly refusing in recent months to ask the Fund for help even though the IMF has clearly said it stands ready to assist.
Several leading economists, including former Prime Minister Owen Arthur, had also been imploring the former Government over the past two years to do so, with Arthur using the March 2017 Estimates debate in Parliament to suggest that the move was inevitable, while warning that the island simply could not tackle its multi-billion dollar debt crisis on its own.
“A debt refinancing obligation of that order or magnitude cannot be accomplished without the help of the international financial community.
“And Sir, there is a powerful reason for us to engage with the International Monetary Fund. We are not going to get over the debt unless there is some institutional arrangement that gives credibility to the creditors of Barbados that the Government of Barbados is not acting unilaterally on the matter,” he said at the time.
Noting that Caribbean countries that engaged in debt refinancing or debt exchanges were doing so under the auspices of the IMF, the former Prime Minister, who recently assisted Grenada with its IMF programme, said while a relationship with the Washington-based lending institution would not be easy, Barbados had nothing to lose.
“When I hear of all the things that we need to do I say to Parliament that Barbados cannot turn its back on having its debt restructured under a Fund programme . . . . It cannot turn its back on the $750 million it can borrow under the Fund at one per cent.”
Since then, Mottley had announced during the recent May 24 election campaign that her Government would be prepared to go to the IMF if it has to and just one week after assuming the reins of Government, it decided to bite the bullet, as per Arthur’s advice, except that it is also prepared to default on its foreign debt payments at the same time.
Bert van Selm, the IMF Resident Representative in Jamaica, is leading the delegation to Bridgetown to start discussions on how the Washington-based financial institution can support the Government’s economic plan.