IMF Program Unpacked – Our Way of Life Will Change, FOREVER

STAFF APPRAISAL

30. Over the last decade, Barbados economy has experienced very low growth, and fiscal and external imbalances have gradually led to an unsustainable situation, with very high debt, and very low reserves. These challenges must be addressed by a combination of fiscal consolidation, measures to boost growth, and debt restructuring. The authorities’ Economic Reform and Transformation program seeks to address these long- standing structural imbalances and implement an aggressive front-loaded and comprehensive reform agenda – extracted from p.18 of the IMF Report 2018

 

The 77 page IMF package detailing the REQUEST FOR AN EXTENDED ARRANGEMENT UNDER THE EXTENDED FUND FACILITY; STAFF REPORT; STAFF SUPPLEMENT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR BARBADOS was posted to the International Monetary Fund website on October 4, 2018. It is no surprise the traditional media has not seen the value in unpacking the details of the arrangement secreted in the voluminous and technically worded documents.

What has been widely communicated is that in record time the new Mottley government has been able to secure the approval of SDR 208 million or USD290 million. The government’s PR has been quick to point out that the draw down from the IMF represents 220% of Barbados’ IMF quota and is a ‘homegrown’ program.

Key elements of the program are:

  1. Fiscal adjustment: increase primary surplus to achieve 6% by 2019/20
  2. Reform state owned enterprises (SOEs): reduce transfers to SOEs by 2%
  3. Structural reforms to support growth: improve business facilitation
  4. Debt restructuring: debt is deemed unsustainable and government has aggressively moved to administer ‘haircuts’ to bond holders

In the background section of the document (p.7) the IMF delivers a negative synopsis of the performance of the Barbados economy post the 2008 global financial crisis. One of the program objectives of interest to the blogmaster is item 8, p.9: “Increased investment demand can restore growth and increase its potential. Restored credibility in the macroeconomic framework is expected to increase investment. Higher net FDI inflows will contribute to improving the stock of capital and, through this channel, actual and potential growth could reach close to 2 percent by the end of the program“.

 

Other key deliverables of the IMF program:

  • Fiscal discipline will help address external imbalances and rebuild international reserves.
  • Fiscal reforms over the program period aim to address structural weaknesses in Barbados’ fiscal framework.
  • Streamlining, restructuring, and privatizing SOEs will substantially reduce transfers to public institutions
  • Vulnerable groups will be protected by strengthening social safety nets
  • The authorities remain strongly committed to the exchange rate peg, which has been in place since 1975 and has provided a key anchor for macroeconomic policies.
  • The program will lay out a roadmap for normalization of monetary policy.
  • The CBB Act will be amended, with the help of IMF TA, to strengthen the autonomy of the CBB and the limitation on CBB financing of the government, among other enhancements
  • The authorities have made progress in identifying debt restructuring parameters that would provide debt relief without jeopardizing financial stability.
  • Significant progress has also been made in discussions with domestic and external creditors.
  • Debt management capacity will be strengthened.
  • To promote long term and potential growth, labor, product and service markets will be liberalized
  • The authorities intend to establish an Economic Program Oversight Committee (EPOC) to strengthen societal ownership and build public support for the measures in the program.
  • Data inadequacies continue to hamper understanding of key macroeconomic aggregates.

 

The part of an IMF agreement that raises the most concern are the condition or in the case of Barbados what are the targets we will have to meet to be able to draw down on the SDRs approved.

 

Quantitative performance criteria:

  • Floor on the central government primary balance (excluding repayment of central government arrears)
  • Ceiling on the stock of Net Domestic Assets of the CBB
  • Floor on the Net International Reserves of the CBB
  • Non-accumulation of central government external arrears (excluding arrears resulting from nonpayment of debt service for which the government is pursuing a debt restructuring).
  • Ceiling on grants and transfers to public institutions
  • Ceiling on the stock of public debt

Indicative targets:

  • Ceiling on the stock of central government domestic arrears
  • Floor on CG social spending Structural benchmarks

Structural benchmarks

  • These will focus on SOE reforms, growth and business climate, CBB autonomy, tax policy and revenue administration, public sector reform, and public financial management (Table 2 MEFP). The structural benchmarks will be critical to underpin the adjustment effort.

The average citizen will not read the IMF report and others will ‘scan’ to satisfy a mild curiosity.  It is obvious to the blogmaster after reading the report that there are significant changes still to come that will drastically affect Barbadians from all walks of life. As a people are we ready to be that chanage?

 

Link to Barbados : Request for an Extended Arrangement Under the Extended Fund Facility-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Barbados

468 comments

  • I will do some googlization to find the requisite information to support the assertions by Dr.K

    with regards to ” job opportunities which would become available through the training include medical transcription, medical coding and legal transcription. ”

    I do not want to be critical of the BLP unless I find something that is irrefutable .

    Like

  • Retraining a few unemployed low-skilled workers in medical transcription, medical coding and legal transcription cannot be the making of a knowledge-based economy.
    The government still has to spell out its plans for a knowledge-based society, which so far it has failed to do, apart from nonsense about speaking Mandarin. First, we want to know what is their understanding of the contemporary sociology of work.
    A few months ago Dr Suckoo-Byer tried to start a discussion on the future of work, but typically Barbadian, she was widely ignored. That debate is still relevant.
    The educational system is also fundamental to a knowledge-based society, so far – nearly five months in – the government has not made a significant statement about education reforms. What makes this more worrying is that the current minister, one of the more ethical persons in the government, is seriously ill. We all wish her the best.

    Liked by 1 person

  • @Hants October 15, 2018 11:12 AM “My fellow Bajans, you are invited to visit Canada after October 17th to enjoy the freedom to smoke weed legally.”

    Yes sir.

    Thank you.

    I am on my way.

    Like

  • @Hants
    Good news and bad news
    1) The weed is in the mail
    2) Canada Post is going on strike

    Like

  • @Sargeant October 17, 2018 3:50 PM “1) The weed is in the mail. 2) Canada Post is going on strike.”

    You made that up, right?

    Lolll!!!

    Like

  • No he did not, unless those weed companies are using private couriers, Canada Post is really on strike.

    Like

  • I am looking in the Ontario Cannibis Store:

    https://ocs.ca/

    and wondering if they will deliver overseas, just like Amazon does with books, and wondering if I can have mine brought in by Fedex, or Canada Post and the Barbados Postal Service.

    I am looking at the prices. Nothing cheaper than $7.95 CDN.

    I am looking at the big yellow scary government notices. “Cannabis includes some of the same chemicals as tobacco and can cause the same harms.” “Regular use of cannabis can increase the risk of pyschosis and schizophrenia.” “Keep out of reach of children” “Store in a dry place.” “No expiry date has been determined for this product.”

    Looks to me that wunna Canadians have found a way to take all the fun out of the herb. Legal cannabis seems to be as much fun as my high blood pressure medication.

    Like

  • Is there a moral void in our culture, or is it just on BU? Her we are, rightly condemning drug dealing and illegal drug use, yet some of our elders on BU, many at or approaching pension age, are celebrating the irresponsible Canadian decision to legalise cannabis
    – many of them even bragging about using the drug. Are we insane?

    Liked by 1 person

  • @Hal Austin October 17, 2018 4:54 PM “many of them even bragging about using the drug.”

    Exactly who is boasting about using cannabis?

    Like

  • Of course Ha, Ha, the bajan clown in UK, the consummate jackass is still himself lost in the 1950s..

    I have had a MEDICAL MARIJUANA prescription for 9 YEARS…I can damn well sample marijuana in it’s medicinal form anywhere I damn well please, I have said on here already I have had a prescription….and can share the info if I so wish…

    …..only the slaveminded hypocrites would catch an issue…well too bad for you..the weed in it’s medicinal form..was damn good…so there.

    Maybe Ha, Ha should try some…and he would make more sense and would not be such a coward….next place am going too try a sample…LONDON..ya want my address to send the police…don’t waste ya time, they can’t do anything with a prescription..they would tell you that…it must be killing you I got that much FREEDOM…and you don’t…..lol

    “Britain is the world’s largest producer of legal cannabis, a new report from the United Nations has revealed.

    Ninety five tonnes of marijuana was produced in the UK in 2016 for medicinal and scientific use, accounting for 44.9 per cent of the world total, its International Narcotics Control Board (INCB) found.

    The UK is also the largest exporter of the drug, with 2.1 tonnes exported in 2016 – roughly 70 per cent of the world’s total, the report stated.”

    Like

  • “He meanwhile revealed that he has already had talks with Prime Minister of Barbados Mia Amor Mottley and other key officials, to put these “ambitious plans” for the island’s iconic sheep in motion.

    Currently, Barbados is aiming to multiply and improve herds of Black Belly Sheep from 15,000 to 600,000 sheep over the next ten years,”

    Like

  • And before the uninformed clown starts…recreational marijuana is completely different to marijuana in it’s medicinal form…which MUST be processed under stringent conditions in a sterile environment..

    recreational marijuana is iffy at best, I never use it.

    Liked by 1 person

  • ATTEMPTED abuse, Piece. I wasn’t such an easy target.

    Like

  • @ Donna,

    I am sorry to have misconstrued your suffering and my commensurate relating of your matter

    AND I am sorry that one of us males could have been so unkind to attempt to effect such an act.

    Like

  • Pingback: Government MUST Clear the Air on the State of the NIS, it is Our RH Lifeline | Barbados Underground

  • @WARU October 17, 2018 5:36 PM “recreational marijuana is iffy at best, I never use it.”

    Oh there is plenty of good government sanctioned marijuana if you cross the norther U.S. border. or you can buy online. But alas they do not deliver to the U.S.

    https://ocs.ca/collections/all-cannabis-products

    Please note that I have never used the herb myself, even when I found a large tree growing on my property. i am rarely sick so I don’t need medical marijuana. And I can entertain/recreate myself and others without marijuana [or alcohol]

    Like

  • Piece,

    Males are not collectively responsible for the actions of other males unless they have influenced other males in that direction. Thank you for your empathy but I had the good fortune of being believed by my family members, including his wife, my mother and my father and so was spared the misfortune of the further trauma experienced by many others who dare to tell the truth. This didn’t happen until many years after because for years I buried it in the back of my mind and did not even admit to myself that it had happened. I continued my relationship with that family member whom I loved very much and nobody would have known that there was a problem. Until something he said triggered my memory and I blurted it out.

    In true Trumpian style, he strongly denied it and said derisively that I wasn’t even his type. (Derriere not big enough. I have since gathered that this is supposed to be the ultimate Bajan put down.) Unfortunately I was not known for being a liar and so I was believed. That of course is before these days where in your face liars caught repeatedly on video are believed over everybody else. .

    Like

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