As Barbados moves closer to implementing an International Monetary Fund (IMF) structural adjustment programme, a regional spokesman for the IMF is warning the Mia Mottley-led administration that it must be prepared to stand by its tough decisions.
“You have to have the political will to know that some of these things that you do are going to impact your supporters, but then that is where the initial conversation about what needs to be done is important,” warned Wendell Samuel, programme coordinator for the Caribbean Regional Technical Assistance Centre (CARTAC), the Barbados-based regional resource centre for the IMF.
He also suggested that donors needed to be on board with the prescribed changes.
“They are going to provide the financing because even though you are generating your primary surplus there are financing that need to come from the debt restructuring, for paying the debt that’s there,” the Vincentian economist explained.
He further warned that the journey would not be a smooth one and that medium term challenges should be expected, especially when it came to the best policy options for the economy.
“In a lot of instances it is trial and error. So sometimes the most technical solution is not going to be the most efficient one and sometimes the second best is probably going to be good enough,” he explained.
“It is important to stay the course. Basic reforms are going to bite, people are going to lobby to have things rolled back. The important thing is to continue pushing forward,” the IMF spokesman insisted.
He stressed that management and efficient implementation of the reform agenda was critical.
And based on his experience in similar economies that have entered into IMF arrangements, Samuel said there would be need for strong “coordination between the ministries and with the Central Bank to ensure that things remain on track.
“For that you need a cadre of skilled, committed public servants. This is indispensible. These people are probably going to be working every weekend and more than 18 hours a day at times . . . in some cases you are going to recognize that there are square pegs in round holes and they have to be removed,” he added.
Samuel, who was addressing the Central Bank of Barbados’ 38th annual review seminar at the Radisson Aquatica Resort this morning, was the mission chief and resident representative for Antigua and Barbuda
during that country’s standby arrangement with the IMF.
He also served as mission chief for the Seychelles during the last two years of that country’s extended fund facility.
During his presentation on the topic Orthodox Policies and Macroeconomic Adjustment in Small States: A Tale of Two Cities, Samuel examined the IMF restructuring programmes of Antigua and Barbuda and Seychelles, while highlighting their similarities, the policies implemented and the results achieved.
He revealed that both countries had defaulted on some aspects of their debt, and had both developed homegrown programmes supported by the IMF, which were focused on strong fiscal adjustment, comprehensive debt restructuring and structural reforms.
Samuel said like those small states, Barbados would have to make sacrifices, explaining that besides taxes, public sector job cuts and other cuts in Government expenditure, there would be a need for more private sector led growth, improved business facilitation and restructuring of state-owned entities.
The Vincentian national said it would also be critical for Government to build public consensus by explaining the level of sacrifice that was needed and the results that should be expected.