Former PM offers advice to Government
BARBADOS could have access to loans of up to Bds$1.3 billion if it enters an agreement with the International Monetary Fund (IMF).
That is according to former Prime Minister, Owen Arthur, who has made a strong case for an IMF programme for Barbados, with financing to help the country out of its difficult economic situation.
Presenting a lecture sponsored by the Sir Arthur Lewis Institute of Social and Economic Studies (SALISES) on Wednesday night at the Errol Barrow Centre for Creative Imagination, Arthur said that there is no point in this country continuing to implement IMF policies as is now being done, without access to its funding. The funding is necessary to cushion the negative impact of Fund policies, he advised.
The hour “of decision has arrived”, he declared while speaking on the topic “Towards a New Governance”.
Arthur, who was Prime Minister between 1994 and early 2008, explained that Barbados’ present quota in the IMF is Bds$260 million. Depending on the extent of the adjustment proposed, he stated, Barbados could borrow between three and five times that quota.
“That amounts to between Bds$780 million (US$390 million) and Bds$1.3 billion (US$650 million),” the Independent MP for St. Peter declared.
He said that such borrowings would carry an interest rate of one per cent as compared to the seven per cent the rate at which Government accesses other borrowed resources.
“An agreed programme with the IMF could also trigger access to Policy- based loans by the Inter-American Development Bank (IDB) and the Caribbean Development Bank (CDB), which could run into hundreds of millions of dollars, again at concessional interest rates,” said Arthur.
The economist is convinced that the Government of Barbados is not going to be able to clear the arrears with the University of the West Indies and the Private Sector; or restructure the economy unless it can have access to funding on this scale and on such terms.
He recalled that this country had twice in the past – with both BLP and DLP administrations – concluded programmes with the Fund to overcome financial problems that were too large for the country to handle on its own.
Unlike other Caribbean countries, Arthur went on to say that Barbados is essentially implementing an IMF-style programme without having access to funding from the Washington D.C.-based institution.
He pointed out, too, that the turnaround which Jamaica and St. Kitts-Nevis are seeing as a result of being in IMF programmes, is because the Fund has recently adopted a new approach to structuring its relationships with countries.
“It no longer imposes quantitative targets of its own deviation on the counties,” the MP said.
“Rather, the countries specify their fiscal and economic restructuring programmes in collaboration with the Fund, and that programme thereafter agreed to a set of activities whose implementation the Fund will support by providing financial resources,” he added. (JB)
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