Barbados Prime Minister, Freundel Stuart, Wednesday rejected a suggestion from former prime minister Owen Arthur that the island has no option but to go to the International Monetary Fund (IMF) for assistance in dealing with the ailing economy.
Speaking in the Parliament on the debate of the 2017-2018 Estimates of Revenue and Expenditure Arthur, an economist, who served as prime minister from 1994-2006, said that the move to the Washington-based financial institution was inevitable and warned that the country could not tackle its BDS$3.3 billion dollar debt crisis on its own.
“A debt refinancing obligation of that order or magnitude cannot be accomplished without the help of the international financial community.
“We are not going to get over the debt unless there is some institutional arrangement that gives credibility to the creditors of Barbados that the Government of Barbados is not acting unilaterally on the matter,” said Arthur, a former finance minister, who recently assisted Grenada with its IMF-approved home grown fiscal adjustment programme.
But Prime Minister Stuart reiterated that his government would not go the IMF route- at least not now.
“I heard the member of Parliament for St. Peter (Owen Arthur) yesterday say we should go into an IMF programme.
“I want to make it very clear, I spoke to the Chamber of Commerce in January and I said that there would be no panicking resort to the IMF by the present government of Barbados,” Stuart said.
“If the stage is ever reached where it has to happen, as with the case of (Former Barbados prime ministers) Tom Adams, as with the case of (Lloyd Erskine) Sandiford, this Prime Minister will have the courage to look the country in the face and say…here is what the facts are; here is what I think we have to do for the good of this country. But that is not an agenda item for the government at this stage.”
Stuart said Barbados was not bulldozed into becoming a member of the IMF and there is no fear of the international financial institution but he sees no need to seek them out at this time.
But he also admitted that the country was spending more than it was earning, which had led to enlarged foreign debt and the excess printing of money. He said though the government had tried to keep the deficit at a manageable level, he agreed that they had over a prolonged period failed to do so.
However Stuart said his administration needed to enlarge foreign debt in order to sustain local development.
“Given the context in which we have been operating, over the last few years, in the wake of this crisis, in the wake of losing a billion dollars in corporate tax revenue, we’ve had revenue challenges while our expenditure has been fairly consistent.
“This is not from everlasting to everlasting,” Prime Minister Stuart said, about the current fiscal crisis, adding “it is not designed to be from everlasting to everlasting.”
He said his office, along with the Ministry of Finance and other cabinet colleagues “have been trying to reduce that fiscal deficit so that we can get ourselves out of that difficulty and get the public finances back to normal.”
The Prime Minister however boasted that “the report card this year showed that we have made significant progress in that regard.”
On the issue of the possible devaluation of the Barbados dollar and the recommendation for the local currency to be pegged to a basket of currencies instead of the United States dollar, Stuart insisted that there will be no devaluation and the currency will remain pegged to the US dollar.
“Our peg to the US dollar has served us well ever since1975. “It has made our business transactions certain; our business people have been able to rely on it. Our citizens have been able to rely on it.”
He acknowledged that the US dollar “has been strengthening against other currencies in recent times,” but said it has happened before and can change.
He said that government should respond to events instead of reacting to them in order “take the decisions you consider to be in the best interest of the country.”