Having completed an International Monetary Fund (IMF)-backed austerity programme, Prime Minister Mia Mottley has signalled that Barbados will be engaging the Washington-based institution further but said an announcement will be made by the end of next month on what form that will take.
In any case, Mottley has announced that Barbados will be accessing its eligible share of about US$210 million (BDS$420 million) from the IMF’s Resilience and Sustainability Trust (RST), saying it was “the right instrument at the right time, for the people most in need”.
The RST was established in May to help countries build resilience to external shocks and ensure sustainable growth, contributing to their long-term balance of payments stability.
The Prime Minister said in addition to addressing issues relating to climate, the funds from the RST will help the country to address matters relating to the COVID-19 pandemic.
Stating that she was grateful to have come to the end of the four-year IMF programme which started in October 2018, Mottley said: “All of us know that we have decided that there will be a conversation and we hope that between now and the end of July, by the third week of July, Barbados will make a decision on what our successor arrangements are.”
Welcoming the RST as a major victory for small island developing states, given that it takes the vulnerability of countries into account, the Barbadian leader explained that accessing this funding will be “linked to some kind of relationship with the IMF”.
However, she hinted that she was unlikely to enter a programme that would require policy reforms.
“The IMF has many instruments, some of which, like the Extended Fund Facility (EFF) that we just had, is anchored in money being disbursed and significant debt being accumulated. Then you can have a precautionary programme where you only draw down if you need it, and then of course you can have programmes that are policy-based that don’t have any money at all coming with it but that still allow us to be able to see where we can have the policy reforms that are going to make the difference,” Prime Minister Mottley explained.
“Those policy-based reforms for us, we have done a lot of them already because we are now coming out of the programme. So, either which way, for us to decide what kind of relationship we want with the IMF, we will decide that by the third week of July.”
In her assessment of the IMF programme that supported the homegrown Barbados Economic Recovery and Transformation (BERT) plan, the Prime Minister said it had been a long journey that had not always been easy.
“There are some who bear the scars, regrettably, from some job losses. There are others, however, who have been saved and shielded because of our ability to be able to keep this country afloat and to be able to do the exciting, innovative things,” she said.
Mottley recalled that Barbados has been able to make progress in several areas while being in the BERT programme, including health, transportation, education, and welfare.
She said her administration was able to achieve what it did while being in the IMF programme by being strategic and “focused in a laser-like way and also by having partners who could cooperate with us”.
Mottley made the points during a joint press conference with Managing Director of the IMF Kristalina Georgieva, as they wrapped up her four-day visit to the island.
The Prime Minister said Barbados’ survival will require “thinking outside of the box” and multiple approaches to address a range of lingering issues as well as those that arise in the near future, including that of a declining population.
“What does it mean for the average citizen? There will be some behaviour modification. Nobody can go through this time in this world today without altering aspects of some of their behaviour,” she said, adding that businesses must also accept that they will not have extremely high profits this year or the next if they are to help ensure social stability.
“All of us are in this together. Therefore, whether it is Government taking a little less, whether it is the private sector taking a little less, whether it is average citizens doing a little more, we have to now master it,” she added.
Georgieva described the BERT programme as very successful and “an example of agility and adaptability”.
She recalled that when the programme started, the targets were ambitious but the COVID-19 pandemic resulted in some adjustments.
“We are in a place today when we can proudly say to Barbadians that we have done the right thing at a tough time, and the programme, as a result, leaves Barbados stronger. In other words, we have a better economy and better social conditions today,” said Georgieva, as she pledged the IMF’s willingness to continue to provide support.
However, she reiterated that Barbados, like the rest of the world, should expect some tough times ahead, as she indicated that the IMF, in another month, will announce its downward projection for global economic growth. [email protected]