By tomorrow, the coffers of the Central Bank of Barbados should receive a transfer of just under $BDS100 million dollars from the International Monetary Fund.
It’s a portion of the US$290 million loan from the multilateral lending institution brokered under its Extended Fund Facility in a record deal to stabilize the ailing Barbadian economy.
Months, even years after noted economists at home and abroad have advised, warned and cajoled us, we finally have a balance of payments deal so desperately needed to help us emerge from the quagmire that has virtually left the once enviable Barbados economy tottering on the brink of financial ruin.
The Government’s economic advisory team tells us that this infusion signals to the world, especially investors, that Barbados is back in business as the deal unlocks other needed sources of financing.
Chief Economic Counsellor and lead negotiator with the IMF, Ambassador Dr Clyde Mascoll, maintained on Monday that the homegrown IMF was the best option for the island: “This journey is unavoidable given the extent of the debt we found, plus the level of arrears left by the last administration, which exceeded $1.5 billion and pushed the overall debt to 175 per cent of GDP; the third highest of any country in the world.”
Now that the negotiations have been put to bed, the real work begins, but so does the pain of austerity.
Said Mascoll, “It is not going to be easy going.”
Likewise, the president of the Barbados Economics Society, Shane Lowe, anticipates that with more cuts on the horizon as the Government sheds weight, Barbadians will no doubt feel the belt tightening.
“So, there will be further belt-tightening and then, depending on what the cuts are to certain state-owned entities and other expenditures within the Government, those would also require further belt-tightening,” said Lowe.
So, there is no gain without pain.
After all, recovery is about getting well after being sick, and the process of improving after being in a bad condition.
From the outset we have to accept that recovery from a crisis of this magnitude will not come quickly and that the recovery will not follow a straight line.
Barbadians will therefore have to steel minds and gird loins to rise up to the challenge of the next few years in the hope that we will emerge stronger and better.
There are urgent tasks to be undertaken to reinforce the recovery and we wait expectantly on the Government to outline the next phase of the Barbados Economy Recovery and Transformation plan.
The expectations are high. So are the risks.
Barbadians, for the last ten years, have been crying out for relief from burdensome taxes and they are anxious to see the massive deficit fall, a rise in foreign exchange, return of foreign investment, a drastic improvement in the delivery of social services and the creation of more jobs.
But the Government must strike the right balance in meeting the realistic needs of its citizens and taking the tough decisions to yield the intended results.
So this is not the time to play partisan politics or pander to those who resist the inevitable pain of restructuring.
The Prime Minister says it most, and says it best, many hands make light work. All must fairly share the load of the sacrifice.
Barbados’ economic recovery is also tied to how well Government can control its appetite for spending, lure investors, strip red tape from entangling business, diversify the economy, inspire productivity, maintain strong dialogue with the Social Partnership and keep Barbadians in its confidence.
Moreover, we expect that the next phase of BERT will provide a clear direction on the proverbial elephant in the room that has dogged Governments past and present – privatization. Transparency must be the watch word on how the debt-ridden operations at the Transport Board, the Caribbean Broadcasting Corporation, the Queen Elizabeth Hospital and the like will be handled.
Government also need to provide greater light on what will be the role of the private sector especially since it is business, and not government, that generates economic activity and jobs.
The achievement of any of these goals would be a worthwhile accomplishment for the Government and would contribute to economic growth.
What we don’t want are empty promises. What our people do not need is little or no gain after all this anticipated pain.