Nothing, not even the terms of an International Monetary Fund (IMF) agreement, will hinder the Mia Mottley-led administration’s commitment to the social welfare of citizens, two high-profile Government advisors have promised.
Senior Advisor Dr Kevin Greenidge and Special Envoy to the PM on Investment Professor Avinash Persaud, in separate interviews with Barbados TODAY on Monday, stressed that the Government is willing to further revise its fiscal target of a one per cent surplus to boost spending for job creation and welfare as it navigates the uncertainties of COVID-19.
The economists were responding to recent suggestions that the IMF-supported Barbados Economic Recovery and Transformation (BERT) programme is out of touch with the social realities of a Barbadian society that is facing unemployment rates of over 35 per cent brought on by the collapse of tourism due to COVID-19.
Persaud told Barbados TODAY: “We recognise that this is the deepest contraction of the economy in living memory. No one can overestimate the impact on a tourism-dependent economy of there being practically no foreign tourism. The official numbers indicate that around 35 000 lost their jobs as a result of COVID…and there will be many who are not part of the regular economy who have lost their jobs. They may not be in the official figures but we know their challenges are just as real.”
Meanwhile, he pointed to the $75 million in unemployment benefits paid to 29 000 workers since March. He also pointed to payouts from new instruments like the Business Interruption Benefit, the Small Firm Wage Fund, and the Household Mitigation Unit.
“We are not being held back today by targets or money. If we need to change our targets or spend more money, we will, but today, the challenge is managing in a time of COVID and getting projects ready to the point of where we can spend and get jobs. We understand the difficulties and are working non-stop to try to ease the challenges everyone is facing,” added Persaud.
In addition to shielding welfare, Dr Greenidge indicated that Government has not shied away from increasing expenditure to outfit hospitals, polyclinics and isolation centres.
“About $35 million was spent outfitting Harrison’s Point [COVID-19 isolation facility], bolstering drug services, and providing new equipment at polyclinics. How was that done if the programme is untouchable?” asked Dr Greenidge.
Government’s fiscal target for the year 2020/2021 under BERT was revised from six per cent of GDP to one per cent of GDP at the end of March, following the onset of the pandemic, placing an additional $500 million at government’s disposal.
During a press conference last Friday, Opposition Senator Crystal Drakes called for a complete re-examination of the programme, including a further revision of the one per cent primary fiscal surplus target. A handful of academics, including Director of the Sir Arthur Lewis Institute of Social and Economic Studies Dr Don Marshall and retired academic Dr Michael Howard have also weighed in.
The academics described the BERT programme as being too restrictive at a time when economic recovery depends on increased government spending.
However, as a September meeting looms between Government and IMF officials, Dr Greenidge admitted that further adjustments would be made if necessary.
“The IMF now allows countries to own, develop and take charge of their programmes while helping you to meet your targets, championing your cause and providing some financing. This is Barbados’ programme,” he stressed.
“So, if we have to go to a primary deficit because of what we are seeing, then that will happen. We have already gone from a surplus of six per cent to a surplus of one per cent and we have an IMF mission starting next month and we will look at it again.”
The Government advisor also defended the recently implemented Barbados Optional Savings Scheme (BOSS) which is projected to provide an additional $45 million for capital works projects to generate employment. He also argued that local unemployment projections are no different than in many other countries crippled by the pandemic.
“Everywhere in the world was hit by COVID, but we are soaking up unemployment with capital works projects. The BERT programme is a dynamic programme. It is not static, and it is designed to transform, but because of the lash from COVID, we have increased spending in certain areas to respond,” Dr Greenidge added.