Fears for MSMEs

Chief Executive Officer of the Small Business Association (SBA) Dr Lynette Holder agrees that should Government “hastily go down the road” of trying to achieve a certain fiscal surplus under a new International Monetary Fund (IMF) programme, the country’s micro, small and medium-sized enterprises (MSMEs) will not get much-needed assistance.

She expressed concern as she described the sector as a vulnerable group and insisted that it was critical for the Government to continue providing support through its various agencies.

In an interview with Barbados TODAY, Holder recalled that under the first Barbados Economic Recovery and Transformation (BERT) programme which was supported by a four-year Extended Fund Facility (EFF), the Government was initially aiming for a six per cent primary surplus, which was later revised downwards.

She said there could be “serious implications” for spending on the MSME sector should the Government commit to a similar target.

“If you as a Government commit to that in an IMF programme that is going to equate to significant austerity measures being inflicted on your populace. That is the concern I would have . . . and then you wouldn’t be able to provide for MSMEs,” said Holder.

“Government has to intervene in economies like ours and play a greater role and, therefore, provide greater support for vulnerable groups within the economy to be able to function . . . . MSMEs, by their very nature and characteristics, are considered vulnerable groups.”

Earlier this week, Director of the Sir Arthur Lewis Institute of Social and Economic Studies (SALISES) Professor Don Marshall cautioned that if Barbados enters a new agreement with the IMF as it intends to when the current arrangement ends on September 30, its ability to help MSMEs will be limited.

He also noted that while other countries were engaged in deficit spending to get out from “the deep economic morass”, Barbados was focused on achieving primary surpluses.

“The logics that are often brought by even the new-age IMF run contrary to what other countries are doing in their economies and to stimulate small business – which is, they are engaging in expenditures, subsidies and research and development, they are sponsoring it deeply and this is the kind of state intervention that the IMF decries,” Marshall said as he addressed the SBA State of the Industry Conference on Tuesday.

Holder told Barbados TODAY she agreed with Marshall and feared that the Mia Mottley administration would be hard-pressed to provide the necessary assistance for the MSME sector through its various loan and grant funding schemes, once the new IMF programme starts.

“I do appreciate the professor’s intervention and, yes, it would be a concern of ours here. We wait and see then what are the implications, for example, in funding the Trust Fund,” said Holder, who noted that the demand for finance from that scheme had outstripped its ability to provide the funds.

The SBA CEO noted that while the Government often challenged the private sector to “do more” to create economic growth, MSMEs required assistance to do this.

“The fact is that we are in these challenging environments and we are not a totally capitalist country. We are a social democratic country, that is our ideology. So based on that focus on being socially democratic, government then is required to play a greater interventionist role,” said Holder.

“It is against that backdrop that I understand and appreciate Professor Marshall’s intervention.”

Talks between Government and IMF officials began here this week as Barbados seeks US$130 million under a three-year EFF to support a revised BERT programme.

marlonmadden@barbadostoday.bb