EDITORIAL: Public trust must be won on IMF agreement

Barbadians cannot be blamed if they are still cautious whenever they hear the words “International Monetary Fund (IMF) arrangement”. 

Unfortunately, many citizens still have memories of layoffs, taxes, wage freezes and economic hardship that are still linked to past IMF arrangements.

That is why government must continue to prepare for the expected public backlash that arises every time it enters an agreement with the multilateral lending institution.

It must clearly and consistently explain that the new precautionary Stand-By Arrangement with the IMF is not another traditional IMF rescue programme built around austerity and painful conditions.

Prime Minister Mia Mottley has already started making the distinction, but the message must go further. Without strong communication, fear and uncertainty could spread quickly among people already struggling with high food prices, rising utility bills and increasing transportation costs.

While the last IMF programme, which government proudly ended last year, could have been harsher in its impact on ordinary citizens, government manoeuvred through the Barbados Economic Recovery and Transformation (BERT) programme with minimal job losses. Some state entities were amalgamated, some eliminated, some downsized and others weaned off state funding.

Government cannot afford to allow confusion to fill the information gap. In the absence of clear explanations, rumours and misinformation will dominate public discussion.

What government must communicate clearly is that this arrangement is being described as a precautionary safety net, not an emergency bailout. 

The country is not facing a balance of payments crisis, as government has asserted. Barbados is not seeking money because it has run out of foreign reserves or cannot pay its bills. In fact, both the Prime Minister and IMF Mission Chief Michael Perks stressed that Barbados is entering this arrangement from a position of relative economic strength.

The IMF facility is essentially being treated as an insurance policy against external shocks that Barbados cannot control. The world economy has become increasingly unstable due to geopolitical tensions, wars, and supply chain disruptions. 

Most important, oil prices are rising and this is playing out in higher supermarket prices and everyday goods. Small island states like Barbados are particularly vulnerable because they depend heavily on imports and tourism.

Government’s argument is that it is better to secure emergency funding now rather than wait for a crisis to develop later. Anyone who watches the news or following international political developments knows that things can turn on a dime. 

The Prime Minister used the example of war in the Middle East causing severe oil price increases or global economic disruption. If the situation deteriorates, Barbados would already have immediate access to liquidity instead of spending months negotiating financing during an emergency.

For economists and technocrats, this is a sensible explanation. However,  this message must be communicated repeatedly and in language that Miss Brathwaite from Eagle Hall can understand.

Citizens must be assured that government is not preparing another round of painful economic adjustments while people are already battling serious cost-of-living pressures. Businesses too need to be confident that consumer spending will not suddenly collapse because consumers begin to hold back, due to uncertainty about the situation.

With many Barbadians still feeling financially stretched despite signs of economic improvement, government must point to stronger reserves, declining debt and the degree of discipline the administration has shown, despite concerns about significant CARIFESTA spending, for example. 

It is important that government’s messaging must connect to the reality of ordinary people. Though vital, it is not enough to speak only about reserves, debt ratios and international credibility. Barbadians will want to know one thing: “How will this affect me and my family and the money that I earn?”

Government should, therefore, continuously highlight the measures already introduced to cushion rising costs, including freight adjustments, tax relief initiatives and cost-of-living support. It should also explain that the purpose of securing this facility is partly to help protect citizens from future economic shocks, not to deepen their hardship.

Transparency will also be critical. Government should also regularly update the public about the arrangement, explain what commitments Barbados has made and clarify whether there are any policy changes that are linked to this new IMF agreement.

Confidence matters greatly in any economy. If citizens and businesses wrongly believe severe economic tightening is coming, they may reduce spending, and increase anxiety unnecessarily.