PM’s special envoy says IMF facility would be used as needed

Barbados may be returning to the International Monetary Fund (IMF) to ask for assistance under one of its Precautionary fund facilities.

In making the revelation on Friday, Special Envoy to Prime Minister Mia Mottley on Investment and Financial Services Professor Avinash Persaud said the Government is looking to embrace as many life-saving safety nets against unexpected global health, economic and natural disaster shocks as possible.

While not identifying a specific precautionary facility at this stage, Professor Persaud said that Government was considering the range of precautionary funds available within the IMF.

He pointed out that the chosen one would add to an existing Bajan-styled safety net for debt relief, which Barbados is trying to convince the major countries to support.

“The second thing is the precautionary funding which we don’t have at the moment, but it is something we may apply for to the IMF…so it is something we are weighing up at the moment,” the financial

and investment expert told Barbados TODAY.

“The Precautionary Facility is something where you don’t need to use it if you don’t need it, but it is there. And I think having it there in a world of global shocks [is important]. The world is more subject to global shocks than before. So we need a different kind of international architecture to finance,” the investment special envoy to the PM stated.

Contending that COVID, the Ukraine war and climate change are ongoing events, Professor Persaud argued that the more safety nets, emergency facilities and war chests available to the country, the better the Government can protect Barbadians.

“When we got hit by the volcano, when we got hit by the freak storm or the pandemic, the first question was not how we are going to afford it, but the first question was how do we save people. And I think that is where you want Barbados to be…and that requires having access to emergency funding if required,” he insisted.

Professor Persaud, a former Chairman of the Financial Services Commission in Barbados, was also optimistic that the Government would ask the IMF to extend its support for the Barbados Economic Recovery and Transformation (BERT) programme which expires on September 30 this year.

“I think our experience of the IMF during the past four years is one that would encourage us to think positively about this prospect. I think that the reason why we would do it if we did, is that we have now entered a world that seems to be subject to bigger, more global shocks than ever before,” he reasoned.

“And for small states like ourselves, we don’t have the ammunition, the reserves, to fall back on in a world of nautical global shocks. Now we can deal with one, we can deal with two…but three in a row? And therefore, having the safety net of the IMF in a world of increased shocks, I think would be useful, until we are fully recovered from each of those shocks,” the Special Envoy to the Prime Minister on Investments and Financial Services declared. Last month, the financial institution announced that its staff had reached an agreement with Government on the completion of the seventh and final review under the Extended Fund Facility (EFF) arrangement.

The staff-level agreement is subject to the approval of the fund’s executive board which will grant Barbados its final drawdown of US$23 million, bringing the total disbursements to US $435 million.

Prime Minister Mottley had told reporters in May after the staff review that discussions would begin once the mission report “passes the board” at the end of June.

“From July, we will start discussing. Will we have a successor programme? If so, what type of successor programme? Will we go it on our own or is it a time or is it right to go on our own when interest rates are rising globally? Or do you stay in the comfort of concessional interest rates by having a programme or working closely with the other regional development banks and international financial institutions especially given our vulnerability to climate and especially given the fact that COVID even though reduced in severity, though not in numbers, is still very much with us,” she stressed. (emmanueljoseph@barbadostoday.bb)