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IMF Executive Gives Thumbs Up!

The following is Press Release No. 19/235 on Barbados first review under the extended fund facility – David, Barbados Underground IMF Executive Board Completes First Review Under the IMF’s Extended Fund Facility for Barbados and Approves US$48.7 Million Disbursement June 24, 2019 The completion of the review enables an immediate disbursement of SDR 35 million…

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The following is Press Release No. 19/235 on Barbados first review under the extended fund facility – David, Barbados Underground

IMF Executive Board Completes First Review Under the IMF’s Extended Fund Facility for Barbados and Approves US$48.7 Million Disbursement

June 24, 2019

  • The completion of the review enables an immediate disbursement of SDR 35 million (about US$48.70 million). A four-year EFF arrangement was approved on October 1, 2018.
  • Fiscal adjustment is ongoing, with the authorities targeting a primary surplus of 6 percent of GDP in FY2019/20 and several years thereafter.
  • A public debt restructuring is complementing the fiscal consolidation. The restructuring of domestic public debt completed in November 2018 has helped to substantially reduce the public debt burden. The authorities are engaging in good faith negotiations with external commercial creditors.

On June 24, 2019, the Executive Board of the International Monetary Fund (IMF) completed the first review of Barbados’ economic reform program supported by an arrangement under the Extended Fund Facility (EFF). The completion of the review allows the authorities to draw the equivalent of SDR 35 million (about US$48.70 million), bringing total disbursements to SDR 70 million (about US$97.40 million).

The four-year EFF arrangement amount equivalent to SDR 208 million (about US$289.41 million, or 220 percent of Barbados’s quota in the IMF) was approved by the Executive Board on October 1, 2018 (see Press Release No. 18/370).

Barbados has embarked on a comprehensive Economic Recovery and Transformation (BERT) plan aimed at restoring fiscal and debt sustainability, addressing falling reserves, and increasing growth. The program seeks to protect vulnerable groups through strengthened social safety nets.

Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair said:

“Barbados has made a strong start in implementing its ambitious and homegrown economic reform program. All performance criteria for March 2019 were met, and all structural benchmarks have been implemented, although a few with minor delays.

“The FY2019/20 budget provides a solid basis for the targeted fiscal consolidation of 6 percent of GDP. The adjustment effort is supported by several new taxes, ongoing reforms in public financial management, a reduction of transfers to State‑Owned Enterprises (SOEs), and adequate provisions for social safety nets and capital expenditure. If necessary, the authorities stand ready to take additional measures to reach the targeted primary surplus. The planned adoption of a fiscal rule in 2020 will help sustain the adjustment effort over the medium and long term.

“Reform of SOEs is critical for achieving the primary surplus target and maintaining it over the medium term. To secure fiscal space for investment in physical and human capital, transfers to SOEs are envisaged to significantly decline by a combination of stronger oversight of SOEs, cost reduction, revenue enhancement, and mergers and divestment.

“A comprehensive public debt restructuring complements the fiscal consolidation. The domestic debt restructuring completed in November 2018 has significantly reduced Barbados’s public debt burden without jeopardizing financial stability. The authorities are continuing good faith negotiations with external commercial creditors, which together with the domestic debt restructuring, should help restore debt sustainability.

“The fixed exchange rate has served as a key anchor for macroeconomic stability and international reserves have increased. The exchange rate peg and monetary regime would be further bolstered by the planned reforms to strengthen the central bank’s mandate, autonomy, and decision‑making structures.

“Structural reforms target improvements in the business environment to increase growth over the medium term. With the adoption of a new Town and Country Planning Law in January 2019, the process for providing construction permits has been streamlined. Going forward, the authorities intend to carefully review and address the different obstacles to growth.

“Adequate social spending and an improved safety net are key priorities for the program. The authorities have launched a training and outplacement program to mitigate the impact on unemployment from layoffs at the central government and SOEs.”

IMF Communications Department

 

125 responses to “IMF Executive Gives Thumbs Up!”

  1. John A Avatar
    John A

    @ John2

    Ok we can end a year with negative growth but that doesn’t mean we had negative growth in each of the 4 quarters.

    So as you posted in the Nation article although we had 0.7% growth in the first quarter of 2018, we still ended the year with negative growth. For argument sake what we are saying is the poor economic activity in the last 3 quarters not only ate up the growth in the first quarter, but went on to throw us in negative territory by year end.

    That is why they say a recession occurs after 3 consecutive quarters of negative growth. Likewise a recession is only over after 3 consecutive quarters of positive growth.

    In other words let’s say in a year you had 2 quarters of growth and 2 quarters of no growth but ended the year with negative growth. You would not however of ended the year in recession. If however you had a first quarter of growth followed by 3 quarters of negative growth you would of ended the year in recession.

    Why the definition is important is that recession speaks to a economic downhill trend. Where as some would say 2 quarters up and 2 down in the same year speaks to volatility.

  2. john2 Avatar
    john2

    John A.

    We had positive growth in 2016 and 2017
    What was Sinckler growth plan?
    According to you it seems like he was doing a good job.

    I am going by what you said sir.

  3. john2 Avatar
    john2

    John.A

    You are very bad at paying attention to details.

    First quarter GDP was NEGATIVE 0.7 (- 0.7) %

  4. John A Avatar
    John A

    @ John2

    Actually far from, he did a piss poor job. This is where it gets interesting.

    He obtained growth as recorded using our formulas as was confirmed by the central bank, that is true but how?

    Rather than addressing the issues the economy faced he opened the printing press wild and he and the goodly governor, kept the civil service paid by this false flow of worthless paper. So yes he showed marginal growth but he destroyed the balance of money flow to do it. Instead of retooling the indirect tax collection system and collection even half of the billion dollars owed to the state, or retructuring tax collection at the ports of entry, he opted for the easy way out and fired up the printery.

  5. John A Avatar
    John A

    @ john2

    Ok the first quarter was negative too my mistake. All it means is we would of gone in recession a quarter earlier then which would of been the last quarter of 2018.

    It really doesn’t matter in the reality of today and where we are now. What are you trying to get at are you trying to decide if to blame the DLP or BLP?

    I mean does it really matter who we blame, we are here now that is the point that should matter. Lets leave politics out of it and deal with the issue.

  6. john 2 Avatar
    john 2

    John A

    What you have just pointed out is that growth ALONE is the all important factor.

    Now isn’t the IMF oversight causing the current government to correct some of the things you just mentioned?

  7. john2 Avatar
    john2

    I wasn’t trying to blame anyone.
    From my estimation, recession would have started in the third quarter of 2018.

    You on the other seem like you wanted to blame the recession on and only the IMF/BLP program which is not so.

  8. john2 Avatar
    john2

    We would have been in recession prior to or just at the beginning of the IMF.

  9. John A Avatar
    John A

    @John 2

    I really don’t care who put us in recession what I want to see is a programme of growth that will take us out!

    If you feel better saying we officially entered into recession on October 1st 2018 then please feel free to do so. The three months difference does nothing to address where the growth plan to get us out of it is. If you want to pick at quarters what has this government introduced to spur economic growth in the last 3 quarters ending in a few days on June 30th?

    My point is pointing the political finger doesn’t help us with recovery, only growth will and so far that has not occurred.

    I don’t get involved in the party loyalty thing, so if we are going to pursue a conversation based on party blame and who done it as opposed to the bigger issue at hand, I not in that one.

  10. David Avatar
    David

    So many comments debating statistical insignificant numbers. What were the options if we wanted to avoid the IMF? What caused the country to see the IMF as an option?

    Is there a mirror anyone?

  11. Mariposa Avatar
    Mariposa

    A waste of time talking about the IMF
    Most concerning are how the people at home surviving off chicken feed
    Any word yet from this govt on restoring the pensioners benefits
    Or does govt intent is to keep the old retirees living on 40$ per month
    The IMF and there executives can sleep well at night knowning that there austerity policies would make way for govt debt to be paid
    Meanwhile the IMF could not give a god dam on the suffering people or whether they bills are paid or have food to feed their children

  12. David Avatar
    David

    @John A

    We have flogged this issue to death.

    Is the growth you want possibly with poor business facilitation?

    Is the growth you want possibly with a moribund judicial system that threatens to collapse under its weight?

    What is the private sector doing besides penetrating traditional sectors? What does this suggest about the methods used to educate our people?

    Words are cheap you know.

  13. NorthernObserver Avatar
    NorthernObserver

    Based on metrics of measurement, apart from some emotional satisfaction, can any of us tell or feel -1/2% vs +1/2% growth numbers? Did we know in 2013 when Barbados ran a billion dollar deficit, were we overflowing in money? Or again in 2014?
    The ship is stabilizing and that is, in the short term, positive.

  14. john2 Avatar
    john2

    John 2.

    The different quarter only mattered to you when you wanted to point out the IMF program was the cause of the recession.
    Now that I have pointed out that it is not as you were trying to point out, the quarters does not matter……….
    Very well Sir – you already showed your hand for all to read!

    Go back to the last budget and you will read/head about the government growth plan. It may not be what you want but it the BLP plan.

    IMO – once government finances are stabilized growth will come, just like it did under the previous administration,

    From next budget, government will be in a better position to give some “ease” to the economy

    Make sure you have your facts straight next time!

  15. john2 Avatar
    john2

    John do you want to see only growth?

    We had growth in 16 and 17 and still had to take corrective action in 18.

    I want growth to but I want to see stabilization, government finances corrected then I know growth will come.

    Relax!

  16. John A Avatar
    John A

    @David

    Yes they were options to the pain of austerity. Why didn’t we look to collect some of the billion dollars owed to the state through the vat office and customs? You do realise if we could of collected half of that the need for austerity would have been marginal? We like hiring British companies why didn’t we go to a company like Lovett and say ” here is 1 billion see what you can collect and take 20%”?

    Why didn’t we take the $24 million we paid White Oak and spend it upgrading the indirect tax system and customs collections?

    Some would argue the foreign debt was such a small part of the total debt that the whole foreign debt restructuring thing really wasn’t necessary.

    They are always alternatives.

  17. Hal Austin Avatar
    Hal Austin

    @ John A

    John, John, John. You optimist. There is not any discussions about economic policy, even among the academics and media or even on BU, far less..

  18. john2 Avatar
    john2

    John A

    Yes there are always alternatives.

    But you don’t think that there is some sort of problem that this government didn’t do it but opt for austerity instead – the other government didn’t do it but opt to print money instead?

  19. John A Avatar
    John A

    @Hal

    You know something both you and Vincent have said this before to me and I now must admit you were both correct.

    What can I say other than I remain “The Escaped Prison” trying to convince others to step outside and see the real world.

  20. John A Avatar
    John A

    @ Hal

    Should of been prisoner and not prison.

    My apologies to you and Plato!

  21. Hal Austin Avatar
    Hal Austin

    Robert Skidelsky

    A correlation between fiscal retrenchment and economic growth tells us nothing about the underlying relationship between the two. This should be borne in mind in light of new research suggesting that austerity may well be the right policy in a recession.

    LONDON – Harvard University Professor Alberto Alesina has returned to the debate on budget deficits, austerity, and growth. Back in 2010, Alesina told European finance ministers that “many even sharp reductions of budget deficits have been accompanied and immediately followed by sustained growth rather than recessions even in the very short run” (my italics). Now, with fellow economists Carlo Favero and Francesco Giavazzi, Alesina has written a new book entitled Austerity: When It Works and When It Doesn’t, which recently received a favorable review from his Harvard colleague Kenneth Rogoff.
    ompensated for by increases in other components of aggregate demand.” The implication is that austerity – cutting the budget deficit, not expanding it – may well be the right policy in a recession.

    Alesina’s previous work in this area with Silvia Ardagna was criticized by the International Monetary Fund and other economists for its faulty econometrics and exaggerated conclusions. And this new book, which analyzes 200 multi-year austerity plans carried out in 16 OECD countries between 1976 and 2014, will also no doubt keep the number crunchers busy.

    But that is not the main point. Correlation is not causation. The association of fiscal retrenchment and economic growth tells us nothing about the underlying relationship between the two. Does shrinking the deficit cause economic growth, or does growth cause the deficit to shrink? All the econometrics in the world cannot prove that one caused the other, or that both may not be the result of something else. There are simply too many omitted variables – that is, other possible causes of either or both outcomes. So-called statistical proofs always start with a theory of causation, to which the data are “fitted” to get the result the theorist wants.

    Alesina’s theory rests on two conceptual pillars. The main one is that if deficits persist, businesses and consumers will expect higher taxes and will therefore invest and consume less. Spending cuts, on the other hand, signal lower taxes in the future, and thus stimulate investment and consumption.

    The second, supplementary pillar is the assumption that rising public debt leads investors to expect a default. This expectation forces up interest rates on government bonds, leading to higher overall borrowing costs. Austerity, by stopping the growth of debt, can bring about a “sizeable reduction” in interest rates, and thus enable increased investment.

    Alesina writes: “Modern macroeconomics emphasizes that people’s decisions about what to do today are influenced by their expectations of what will happen in the future.” John Maynard Keynes, too, understood the crucial importance of expectations: he is credited by John Hicks with introducing the “method of expectations” into economics. However, Keynes’s expectational map was very different from Alesina’s. His investors do not form their expectations by looking at the government’s deficit and calculating what effect it will have on their future tax bills. In fact, they scarcely notice the deficit at all.

    What they do notice is the size of their markets. For Keynes, entrepreneurs’ decisions to create jobs depend on their expected income from increasing employment. An economic downturn reduces their expected sales proceeds, causing them to lay off workers. A cut in government spending implies that they can expect still fewer sales, causing them to lay off even more workers, thus deepening the recession. Conversely, a rise in government spending, or tax cuts, increases expectations of sales and so reverses the downturn.

    For example, if the demand for automobiles falls, fewer will be sold, and fewer workers will be employed in making them. If the government increases its spending on public works, this will not only employ more workers directly, but also increase the demand for automobiles, so the output of the economy grows by more than the government’s extra spending, thus reducing the deficit.

    In very simple terms, therefore, we have two opposite theories of the appropriate fiscal policy in a slump. Keynes says an announced reduction in public spending signals to businesspeople that their incomes will be reduced because fewer people will be buying the goods and services they produce. But Alesina says that an announced reduction in public spending signals to businesspeople that they can expect lower taxes tomorrow, and therefore will spend more today.

    Readers must decide which theory they find more plausible. Personally, I much prefer the characterization contained in the recent book Austerity: 12 Myths Exposed: “Austerity is a tool of…financial interests – not a solution to the problems caused by them.”

    Robert Skidelsky, a member of the British House of Lords, is Professor Emeritus of Political Economy at Warwick University. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

  22. John A Avatar
    John A

    @ Hal

    I would say Keynes outlook is more correct in the practical world while Alesina’s outlook is based on an efficient public sector being able to lower taxes and maintain service and efficientcy at the lower cost level. This would then benefit all if it could occur.

    I like you like Alesina’s view and in efficient economies it would have a chance, but in Bim I think Keynes got it hands down! Lol

  23. Hal Austin Avatar
    Hal Austin

    @ John A

    Neither. Modern Monetary Theory provides some of the answers. Print money to provide infrastructure developments, then remove that liquidity from the system.

  24. David Avatar
    David

    @John A

    You think!

  25. John A Avatar
    John A

    @ Hal

    Yes but in our case what we have seen is when government contraction occurs and people are laid off, spending falls and the economy suffers. One could argue that happens because of our structure too though. But yes it is an interesting difference in views with both sides having grounds on which to stand.

    Help me to understand this statement though. ” we will continue fiscal consolidation while promoting growth.”

    Put that in English for me.

  26. John A Avatar
    John A

    @ David.

    Lol I was trying to be polite!

  27. Hal Austin Avatar
    Hal Austin

    @ John A

    Voodoo economics.

  28. John A Avatar
    John A

    @ Hal

    Good one I going put that in the draw with ” creating a sandbox for digital currencies to play in” then😂

  29. Hal Austin Avatar
    Hal Austin

    Talk to President Mottley.

  30. William Skinner Avatar
    William Skinner

    @ Hal
    @ John A

    Around here it’s all about the party and crop over economics.
    Bump and wine. Campaigns run on booze and Kaiso. Management by bashment. International Music Fete.
    Time to separate party from policy.
    Cool aid now spiked with rum. Don’t worry with these clowns. International Loan Sharks running things…………

  31. David Avatar
    David

    @William

    A government that was elected by the people running things. See if you can figure that one out.

  32. Tron Avatar
    Tron

    @ BA June 25, 2019 7:25 AM

    At least then we get our beloved devaluation of the worthless Barrow dollar. We have far too many hungry mouths to feed in the civil service and far too many social freeloaders.

    You would have to be an idiot not to understand that Barbados does not have a revenue problem but a spending problem.

    The tragedy is that the school in Barbados does not teach basic financial skills. The natives actually believe that we have currency reserves, when they consist only of debt in USD. I keep asking myself how stupid you can be if you do not want to see this connection.

  33. Tron Avatar
    Tron

    Something serious.

    Many here on the forum scream that the government must present a plan for economic growth. That’s totally naive and stems from the typical Barbadian way of thinking that the state should even help the citizens sh++ on the toilet.

    It’s quite different. The state must shrink, so that the economy can flourish again. Like a plague sore, the welfare state must burn to the ground so that entrepreneurial spirit can revive and initiative can be seen.

    If the government cuts spending by 50 per cent by sacking 10,000 useless and rebellious civil servants and privatising or liquidating all state enterprises, Barbados will be back on the path of virtue in 10 years’ time.

    But if we continue to believe in old demons, if we continue to follow the fever fantasies of an aging Barrow, his curse will continue to hit us: too many civil servants, too high government spending and too much regulation.

    I have a lot of time. Once we have the currency devaluation, there will be many who will call me their prophet and they will renounce the false gods in the church.

    Welfare state means intellectual retardation, crime and poverty.
    A free society means growth and prosperity.

  34. WURA-WAR-on-U Avatar
    WURA-WAR-on-U

    “Barbados will be back on the path of virtue in 10 years’ time.”

    nobody wants you THIEVES, LIARS AND MODERN DAY HUMAN TRAFFICKERS…anywhere near that parliament for 10 years, ya barely got 3 years left…ya are designated human traffickers…ya blighted and cursed…be gone…

  35. Tron Avatar
    Tron

    WARU,

    Why don’t you get elected prime minister and get slaughtered by the social media?

    It’s so easy to always be against it.

    Get out of your lukewarm swimming pool and do something for your country.

  36. WURA-WAR-on-U Avatar
    WURA-WAR-on-U

    I ain’t greedy like yall…money is just not my thing…and if Mia would sit quietly in a space for one second AND THINK….she would realize, she has all she needs to do the right thing, all she has to do is ASK.

  37. fortyacresandamule Avatar
    fortyacresandamule

    Nowadays GDP growth, like GDP itself, is an overrated metric. GDP growth without a commiserate growth in job creation and tax revenue means nothing. If the growth is overwhelmingly productivity driven, it will be a jobless one. If the growth is coming from a few enclave sectors it will not be inclusive.

  38. Lorenzo Avatar
    Lorenzo

    John A , i do not go with fluff but i see John 2 already got you on the back foot as you try to mislead the blog with fancy footwork. According to you Mr Sinckler said there was growth so you swallow that without analysis.This same perdon also said we were turning some corner you beleived that too?Piece claims you are some supposed top shotter but you remind me of T Inniss who appeared and then disappeared supportimg the Dems to the hilt.Therefore you are no more neutral than i am.I support this government and you by your contributions support the DLP.This is your rivht but do not try to pull the wool over our eyes it will not work.
    .

  39. TheOGazerts Avatar
    TheOGazerts

    @John A…
    You have two choices… B or D.
    According to the Bs, if you are not B, you are in the D’s yard
    There is no middle ground

  40. John A Avatar
    John A

    @ Lorenzo

    First, all John2 did was show that the recession started 3 months earlier. The time it starts to me is not relevant, unless as a party faithful you looking to place blame on a party. What interest me is when growth will come. By the end of March 2019 we had 15 months of negative growth, what playing yardfowlism or the blame game going do to fix that?

    If you on a plane looking to crash you really care if the pilot or co pilot made the mistake, or if the mistake occurred 3 minutes earlier or later? A sane person would be concerned more with ” what we got to do not to crash.”

    Next I don’t ” claim ” sinkler said there was growth, what I said is that the data released by the central bank confirmed his claim. You cant
    believe the central bank when it suites and discard it when it doesn’t suit. If the central came and said there was growth in the 2nd quarter of 2019 would you doubt their statement too, or would you believe it because it reflects well on your party?

    Finally if you review my comment when asked by your party colleague if I thought sinkler was doing a good job, I now refer you to my reply at 12.03 pm where you would see i referred to sinkler’ s performance as a MOF as being piss poor! So there goes your argument of me being a D and supporting Sinkler.lol

    So you and the party faithfuls feel free to play the D’s did this and the B’s that game. I got better things to do with my time.

  41. John A Avatar
    John A

    @Ogazerts

    Lord and if I don’t get in the party crap then they would I say I backing traitor Joe! I can’t understand why people feel you got to be in one camp or the other. What ever became of judging a situation based on performance and the ability of free unbiased thinking?

    I said already I help vote Thompson in and help vote Stewart out. The last people that followed a divine leader blindly was in Germany in 1940 and that didn’t end good for the sheep involved.

  42. Lorenzo Avatar
    Lorenzo

    John A you gettig very defensive, you seem rattle.Why is that?Is it bevause you have been called out as you appear?Where were you between 2008 and 2018 with all thesd questions and expert opinions overseas ?As John 2 explained to you before you talk about growth you have to stabilize the economy first of all which is being done.This is elementary stuff you should know.The growth will come after once investment takes place.Therefore i know a bullshitter when i see one.

  43. John A Avatar
    John A

    @Lorenzo

    You should find one easy all you need is a good mirror. Lol

  44. john2 Avatar
    john2

    @ Lorenzo
    First, all John2 did was show that the recession started 3 months earlier. The time it starts to me is not relevant, unless as a party faithful you looking to place blame on a party. What interest me is when growth will come. By the end of March 2019 we had 15 months of negative growth, what playing yardfowlism or the blame game going do to fix that?

    @ JOHN A

    When did the time the recession started became not relevant to you? After your “facts” about when it started were proven to be wrong ?

    From since last night it was you that started pushing when the recession started to suit your political agenda of blaming it on the IMF and by extension the BLP ( who is implementing the IMF program).

    After your FACTS were proven to be wrong then the timing is of no relevance to you (because you cannot use that IMF blaming point anymore)

  45. john2 Avatar
    john2

    John

    If timing of the recession was important to you then why did you keep pushing it from last night?

    You claim to be a man of the people then instead giving “alternate fact” of when the about when the “irrelevant time” the recession started, why did you just come and state the country was in recession for a few years ( that’s how the people feel)?

    Why waste so much time on something that was irrelevant?

  46. john2 Avatar
    john2

    Forgive mistake in my last post

  47. Mariposa Avatar
    Mariposa

    So the IMF has increased the loans to barbados which now totals 97.4million which amounts to more debt
    What i would like to know what are govt plans to repaying the debt
    Under this govt barbados has been put on a path of debt exchange meaning that barbados has replaced one creditor with another the IMF
    In the meanwhile the external creditors are screaming mad
    The public is drowning inexcruciating taxes and govt has not created a growth plan

  48. john2 Avatar
    john2

    John A

    BTW how did you arrive that we were in recession from the IDB report?
    IT stated negative 0.5 % for 2018. How did you know that there wasn’t positive growth in the 3rd quarter – which would have negated any talk of a recession ?

  49. Redman Avatar
    Redman

    Little hard to follow this blog recently.
    We must be in Bush Hill (Garrison) with all these johns bout the place..

  50. john2 Avatar
    john2

    John A

    First you need to get your fact straight —and also you stories

    “Next I don’t ” claim ” sinkler said there was growth, what I said is that the data released by the central bank confirmed his claim.”

    June 24, 2019 11:05 PM

    @ john2
    I think it was claimed we had growth in the 2018 first quarter of 0.2% by the last MOF too.

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