‘The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Created in 1945, the IMF is governed by and accountable to the 189 countries that make up its near-global membership.’ – IMF Website
The IMF is one of the leading financial institutions in the world established to support member countries. Barbados became a member in December 1970 and under Stand-By arrangements in October 1982 and 1992 accessed SDR46.35 of SDR55.77 approved. Given the perilous state of the Barbados economy it is no surprise that there is a clamour from many quarters for Barbados to access foreign currency support at concessionary rate given our forex level and junk credit rating.
Our membership in the IMF ensures that we benefit from rigorous monitoring to ensure ‘’policies that are conducive to orderly economic growth and reasonable price stability, avoid manipulating exchange rates for unfair competitive advantage, and to provide the IMF with data about its economy’’. BU must conclude given our interrupted membership in the IMF for forty six years successive government see value in the membership.
In an IMF working paper titled National Insurance Scheme Reforms in the Caribbean of October 2016 the IMF signalled to several Caribbean countries that with an ageing population, negative to anaemic economic growth, and rising unemployment numbers national insurance funds in the region, projected deficits will deplete assets in the coming years. The following graph extracted from the working paper estimates that on its current trajectory NIS reserves for Barbados will be exhausted by 2037. The reserves represent the excess funds explained as ‘‘income from contributions and investments that exceed the expenditures on benefits and administration that has accumulated over time’’.
On today’s (21/04/2017) Voice of Barbados talk show United Progressive Party (UPP) candidate Craig Harewood attempted to raise the matter and was bundled off the airwaves by moderator Glyne Murray. By asking the UPP candidate to investigate the assumptions used by the IMF in the working paper to support the projection that NIS reserves will be exhausted in 2037 in the opinion of BU was unprofessional by host Glyne Murray. Given the importance of the NIS fund to protecting the financial security of senior citizens of Barbados the intervention by Harewood should have been welcomed by the moderator and used to share his vast knowledge as a former minister of government. It is ironic that the Nation newspaper cited the IMF working paper in an article credited to Gregory Hinkson a former manager of Investments at the NIS Investment and specialist in pension investment analysis titled Social Security under pressure. Someone should assure Murray that the analysis of the IMF staffers was supported by the 2011 Actuarial Review.
The management of the NIS fund has been targeted by the BU community over the years –the burning issue remains the unavailability of recent financials of the fund and the late disclosure of the 15th Actuarial Review as at 2014. It is instructive under Concluding Remarks on page 18 of the working paper the IMF recommends, ‘’Finally, it is imperative that the authorities begin to build national awareness of the fiscal risk associated with the pension schemes and the need for reforms. At a minimum, the actuarial deficits should be systematically monitored and reported to the public with more frequency and a degree of detail to allow proper evaluation of the fiscal risk’’.
BU suspects Murray needs to understand what exhausted reserves by 2037 means AND VOB should apologize to Harewood by inviting him to make his point without fear of moderator harassment.