Despite describing as “onerous” the Government’s new economic targets, UWI management studies academic Dr Justin Robinson believes the International Monetary Fund’s “chemotherapy” was Barbados’ only choice.
But the UWI lecturer said he is concerned that the Government’s economic drive relies too heavily on collecting revenue.
Speaking at a presentation last night entitled Deconstructing the IMF and the IMF support at the Accra Beach Resort, Dr Robinson, who is also on the board of directors at the Central Bank, said while unpleasant, ‘chemo’ was in most cases desperately needed.
“Barbados needs an IMF programme because in my opinion we have an economic problem that is too large to be solved domestically. We are unable to address an economic problem of this magnitude purely on our own,” maintained Dr Robinson, head of the UWI’s Department of Managing Studies at Cave Hill.
“Now that is not because I think the IMF is good or wonderful… because I think of the IMF in ways I think of chemotherapy and surgery. No one takes ‘chemo’ and surgery because they think it’s good for you or because they think it’s pleasant, but you find yourself in a situation where that is your best option…. Given the gravity of the economic situation presenting Barbados, I’m of the view that the economic challenges facing Barbados are too large to be solved in a purely domestic context and an IMF programme is an essential part of the solution.
“The programme’s targets are quite onerous and there’s a risk of missing some of these targets which might call for extra measures if you fall short of the target. That is going to very difficult and will test the mettle and resolve of any Government…and could be quite problematic,” he added.
But Dr. Robinson’s main issue with the targets of the Barbados Economic, Recovery and Transition (BERT) programme was, he said, its heavy reliance on revenue collection.
“My biggest issue with the programme is that is has a strong revenue component and quite a large part of achieving that primary surplus are increases in revenue and how successful we are in collecting that revenue will depend on tax buoyancy.
“Will people change their behaviour, will spending continue and will you actually be able to collect those taxes in a declining economy?” he questioned.
“I think one of the biggest challenges of the programme is its somewhat bias towards revenue collecting.”
But Dr Robinson said Barbados needed the help of an IMF programme if it was to mobilise its resources and have the credibility it required to rebuild the economy.
“Debt failure is not an option for us at this time. This is the plan that we have and we probably have no choice but to complete.”
Using the assistance of the IMF was a signal to key players that Barbados was actually serious about addressing its problems, he said.
The UWI lecturer added the IMF was also necessary to ensure that Barbados was meeting its proposed targets.
“The second benefit of the IMF programme is that you have that monitoring and that accountability that is built into the IMF programme in the sense that the IMF gives you this ability; you get your first drawdown but to get your next drawdown you actually have to meet those targets and that structure is quite potent to keeping us on target in meeting those goals.”