BRIDGETOWN, Barbados (CMC) – Former Barbados prime minister Owen Arthur is urging the Freundel Stuart government to re-consider a relationship with the Washington-based International Monetary Fund (IMF) as it seeks to turn around an ailing economy.
Speaking during the debate on the 2017-18 Estimates of Expenditure and Revenue, Arthur, who is being linked to an advisory job with the current administration, acknowledged that going to the IMF would not be easy.
“Barbados cannot turn its back on having its debt restructured under a Fund programme.
“It cannot run its back on the 750 million that it can borrow from the Fund at one per cent, nor, if the House is not aware, that there are things called policy-based loans to which Barbados can be eligible from the IDB (Inter-American Development Bank) and the CDB (Caribbean Development Bank)… that can only be accessed if the country has a programme in place with the IMF,” Arthur said.
Arthur said there has to be collaboration among government, the financial sector and the public sector if people become unemployed as a result of cuts which have to be made to turn around the economy.
He told legislators that there was excess liquidity in the banking sector and if “people have to go home” because of “rationalisation of state enterprises”, there has to be an agreement to “ease the burden” so they can find jobs outside of the public sector, either in the private sector or as entrepreneurs.
The economist, who served as prime minister from 1994-2008, said that with the island’s currency being pegged to a stronger US dollar, it is making it more expensive to export local goods and harder for major investors who come from places like the UK and Germany.
“This country must begin to have a debate on what should be an appropriate exchange rate policy that coincides with all contemporary goods, services and foreign capital flows in the context of what is likely to happen to the currency against which we are pegged taking into account all of the other currencies of countries with which we do business,” he said.